Target HQ snapped up for $58m
The listed Centuria Metropolitan REIT is moving to buy a series of office towers and has just snapped up the Target headquarters building being developed by Cedar Woods in the Williams Landing project in Melbourne’s southwest in a $58.23 million deal.
The trust will buy the property at 2 Kendall St as it also eyes the acquisition of two properties in Perth.
The trust is looking to add to its $650 million-plus portfolio with the acquisition of the Hatch Building in Perth’s CBD from Charter Hall for about $58 million and it also chasing a West Perth asset owned by Dexus in a rumoured $34 million deal.
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The Melbourne building will sit next to a train station and freeway interchange. It will comprise 12,919sqm of A-Grade office space fully pre-committed to Wesfarmers-owned Target on an initial 10-year lease when completed in 2019.
CBRE agents Kiran Pillai, Neva Courts, Luke Everington and Mark Wizel handled the sale. The purchase price reflects a 6.5% initial yield on completion and a capital value of $4507 per sqm.
“This acquisition represents a significant opportunity to gain exposure to a first generation asset purpose built for a high-quality tenant on a long-term lease with attractive fixed rental increases,” trust manager Nicholas Blake says.
Cedar Woods chief operating officer Nathan Blackburne says the sale is evidence of the strength of Williams Landing’s commercial offering, as real estate investors seek locations outside of the CBD, with strong lease covenants and transport links.
“The sale reflects … a strong result for the company and consistent with our strategy of adding as much value as we can to our developments, before recycling capital into new opportunities,” Blackburne says.
Etherington says the investment was highly sought after by multiple parties due to the high quality of the building and tenant covenant, together with the infrastructure investment and employment growth forecasts for the western Melbourne precinct.
Courts says there is the potential to accommodate more than 13,000 office jobs at Williams Landing and the area will be attractive to suburban office occupiers.
This article originally appeared on www.theaustralian.com.au/property.
