This article is from the Australian Property Journal archive
AMP Capital’s Wholesale Office Fund has bought 700 Bourke St in Melbourne's from Cbus Property for $433.5 million.
The transaction takes Cbus Property’s total sales in the Melbourne office market this week to $1.04 billion after it offloaded the CBW complex to GPT and the GPT Wholesale Office Fund for $608.1 million.
AWOF’s fund manager Nick McGrath said the acquisition of 700 Bourke St is consistent with the fund’s strategy to acquire modern, prime office assets in the major Australian CBD markets and is a further example of AWOF recycling capital out of non-core assets into core assets.
“700 Bourke is a key acquisition and an excellent fit for AWOF. Not only is it an iconic building of architectural significance, it will improve the overall quality of the portfolio and give our investors greater exposure to the Melbourne market via an asset that will provide a strong and growing cash flow over the long-term,” he added.
MccGrath said the purchase price represents a rate per sqm of $6,700, which is below recent comparable transactions in the Docklands.
Following the acquisition AWOF’s exposure to the core office markets of Melbourne and Sydney will increase to 93% and, over a 10-year period, 700 Bourke St will deliver an average income yield of 7%.
The building comprises more than 63,000 sqm of office space, 770 sqm of retail space, a child care centre, auditorium, outdoor terrace and a two-level car park. It is 99% leased to the National Australia Bank, with a weighted average lease expiry (WALE) of 13.6 years by income, delivering 4% fixed rental increases each year.
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