This article is from the Australian Property Journal archive
ABACUS Property Group has counted on wealthy South African financier Nathan Kirsh to back its latest $174 million purchase of the Birkenhead Point Shopping Centre and Marina in Drummoyne, NSW.
Abacus and the Kirsh Group have jointly bought the property from Singapore’s eight richest man, Denis Jen, who put the centre on the market in March this year following a major refurbishment.
But the price paid falls short of the $200 million it was expected to fetch. Jen bought the property in 2004 for $111 million from CDL Hotels New Zealand and spent $50 million to give the centre a facelift.
Jen owns several retail properties in Australia including Market City in Sydney, Q Super Centre on the Gold Coast and the Kenmore Village and Plaza in Brisbane.
The effective acquisition yield for the first year of operation by Abacus is estimated to be 8%.
Abacus managing director Frank Wolf expects that the yield will increase materially through leasing and further development. Abacus’s 50% interest will be funded through existing facilities.
“This is a perfect acquisition for the Abacus Property Group. The asset sits nicely in Abacus’ core plus acquisition strategy of targeting larger scale assets that provide an attractive initial yield and embedded capital growth.
“Abacus and the Kirsh Group believe the site offers excellent reversionary potential as the full effects of the redevelopment are delivered. The property also provides significant scope to increase occupancy, net rental income and capital value over the medium term through the further expansion of the retail and marina components,” he added.
The Kirsh Group is a substantial securityholder of Abacus and as part of the deal, Abacus will provide all property management and development services for the centre.
Located just 5km west of the Sydney CBD, the property is a mixed retail centre and outlet, it has a total lettable area of approximately 31,820 sqm and is anchored by a Coles Supermarket, David Jones Warehouse, Spotlight and Kathmandu as well as 156 stores.
There are also 14 office suites and a multi level car park for 1,395 car spaces.
In addition the property includes the largest privately owned marina on Sydney Harbour offering 187 powered berths. The prime freehold site has a total area of 37,204 sqm with a 155 metres frontage to Sydney harbour.
The contract is conditional on FIRB approval. Settlement is anticipated to occur in late 2010 with $45 million of the purchase price made available by the vendor as interest-free vendor finance for a period of 3 years.
Australian Property Journal
