This article is from the Australian Property Journal archive
ASPEN Group has secured funding from the $11 billion Telstra Superannuation scheme for the Australian Taxation Office development in the Adelaide CBD.
The property is currently being developed by the Aspen Development Fund No.1 for the 12-26 Franklin Street Property Trust.
Telstra Super will take up a 50% equity in the trust for $34 million and Aspen Group will hold the remaining 50% interest, which is based on an independent valuation “on completion” of $190 million. As a result, Aspen will be reimbursed for the funds it has injected into the project from the Telstra Super money.
The agreement also allows Telstra Super to increase its holding if the market value at practical completion is lower than the current projected value, in which chase Aspen Group may make a further equity contribution to preserve its 50% interest.
In addition to the subscription, Telstra Super has also committed to providing a construction loan facility of up to $117.6 million, to be drawn as required from September and has offered a term facility of $117.6 million for the 5-year period post practical completion.
And in event of a default, such as construction cost overruns, Telstra Super is entitled to take a transfer of units in the trust owned by Aspen Group.
“We are delighted with Telstra Super’s commitment to the development and long term co-ownership of this landmark office project in the Adelaide CBD,” Aspen Group managing director Gavin Hawkins said.
“The joint venture with Telstra Super results in a more appropriate strategic weighting of our property portfolio, as well as an opportunity to extend our existing property funds management relationships in the wholesale investor sector,” Hawkins said.
The deal follows a string of transactions involving Telstra Super this year. Recently, Australia’s largest superannuation fund teamed up with Charter Hall to buy the Woolworth’s shopping centre portfolio for $266 million.
And earlier in the year, Charter Hall & Telstra Super bought an office building at 266 George St Brisbane for $300 million from Westscheme.
The ATO building will be the largest commercial office building in Adelaide. Agreements for lease have been entered into with the ATO and Australia Post for approximately 98.5% of the net lettable area and the building has a weighted average lease expiry of 14.4 years.
The development is currently 33% completed on a forecast cost to complete basis and is on schedule for practical completion in October 2012.
Australian Property Journal
