This article is from the Australian Property Journal archive
THE Commonwealth Bank has ended its 10-month search for a new Melbourne headquarters after deciding to new its lease at the Commonwealth Property Office Fund owned 385 Bourke Street.
Colonial First State Property, the manager of CPA announced that CBA has entered into a binding heads of agreement to extend their existing lease at 385 Bourke Street, Melbourne.
The deal announced yesterday ends months of speculation that the Bank was seriously considering moving out of 385 Bourke St when its lease expires in March/April 2009.
Sources said the Bank was not short of offers from developers attempting to woe it to all sorts of locations in the CBD, Southbank and the Docklands precinct.
But it is believed that the global credit crunch and current market volatility dampened the Bank’s share price – currently trading around $42 compared to its 52-week of $62, has forced the Bank to rethink a move anywhere else.
Last year, it was widely tipped that the CBA was moving to Cbus Property’s $230 million CBW development at 550 Bourke St. But earlier last month, Cbus announced that Deloitte’s has agreed to lease the 19 level building for 11 years starting February 2009.
Earlier this year, it was reported that Lang Walker’s had all but inked the Bank to the $850 million Melbourne Docklands.
The fund’s manager Charles Moore said the retention of the Bank has eliminated the largest lease expiry risk in the asset, securing over 37% of the office tower on an effective basis with no downtime.
“The lease has been completed prior to the lease expiry in April 2009, mitigating 22% of the total portfolio lease expiries by income for the 2009 financial year,” he added.
The Bank currently occupies 18,194 sqm of office space over 16 levels together with 2,617 sqm of associated storage space.
The new lease is at a 10% increase above passing rent. This equates to a total of $5.7 million of net rental income per annum.
But the new five year lease is subject to a break clause in April 2012.
Now, over 66% of the lease expiry by income at 385 Bourke St will be beyond 2012.
However, two major lease expiries remain over the next two years in CPA and TRUenergy, which lease 10% and 19% respectively at 385 Bourke St.
Australian Property Journal
