This article is from the Australian Property Journal archive
JF Meridian Trust has sold an office building in Canberra to the MacarthurCook Office Property Trust for $32 million, on a yield of 11.93%.
Located at 38 Akuna Street, the 10 level office tower has a net lettable area of 12,522 sqm, comprising 11,812 sqm leased to the Australian Tax Office until 2009 and 710 sqm of ground floor retail leased to a variety of tenants.
MacarthurCook’s head of property Chris Calvert said this building is a positive addition to the existing assets of the MacarthurCook Office Property Trust.
“The Canberra office property market has experienced strong rental and capital growth over the last three to four years. It currently has one of the lowest CBD office vacancy rates in Australia and while this is expected to increase over the medium term, we believe the property’s prime location, its flexibility in terms of layout and design and quality of accommodation, places it in a strong position to attract future tenants if required,” he added.
The deal takes the trust’s portfolio to four properties, in four states, with a combined value to just under $130 million including the 13 level office building at 181 Miller Street, North Sydney; a three level commercial and retail development at 150–170 Leichhardt Street in Spring Hill on the fringe of the Brisbane CBD and a 10 level office building at 22 King William Street in Adelaide.
“Our intention is to further diversify the geographic spread of the trust with additional acquisitions in Melbourne, Perth and various regional centres as well as opportunities in New Zealand,” Calvert said.
“The trust’s North Sydney and Spring Hill properties have recently been revalued upwards by approximately 10% and 11% respectively from their original purchase prices.
“This level of capital growth within a 12 month period is a very pleasing result for our investors and demonstrates our ability to add value through our pro-active investment management style. We intend to adopt the same techniques with our most recent acquisitions to ensure that we deliver secure income and consistent long term investment performance for investors,” he added.
JFM’s director Andrew Butler the property was identified earlier this year as a non core asset and the sale is in line with the stated strategy of enhancing returns to unitholders from quality investment portfolio.
The asset had a current book value of $21.5 million.
“We have added significant value to the asset with our recent lease renewal of 96% of the building to the Australian Taxation Office until January 2009. The resulting sale price is well above book value and will give JFM the opportunity to re-deploy capital into other growth orientated assets,” he added.
The property was formally marketed through Colliers International and LJ Hooker Commercial.
Following the Akuna Street divestment, JFM’s direct sector weighting by asset value will be 35% to commercial, 33% to retail, 18% to industrial/business parks and 14% to hotels. The hotel weighting includes the settlement of the Travelodge Rockhampton on June 27, 2006.
Meanwhile, the JF US Industrial Trust has raised approximately $128.5 million an entitlement offer.
The proceeds from the entitlement offer, together with additional borrowings, will fund the acquisition of 35 new assets located in or around the Greater Chicago Region and in Grand Rapids, Michigan for approximately $US260.8 million.
By Adam Parsons
