This article is from the Australian Property Journal archive
SEVEN West Media has netted a further $75 million in its quest to claw back $541 million of debt, selling the Perth headquarters of Channel 7, The West Australian and The Sunday Times in Perth’s Osborne Park to Primewest Management.
The newspapers and 7 will continue to occupy the site as part of a 15 year leaseback agreement, although the new owners may seek to adjust the company’s footprint to fast track the 5.65 hectare property’s development capabilities.
Seven had been experiencing troubles before the coronavirus outbreak, and earlier this month sealed the $40 million divestment of its Pacific Magazines business. The company confirmed an offer had been made for the property late in April.
Advertising revenue had fallen by about $42 million year on year over the first three months of 2020, and the group posted a first half loss of $67 million as it shopped around its Seven Studios arm and digital venture portfolio.
North west of the Perth CBD, the property encompasses three titles at 50 and 54 Hasler Dr and 44 Walters Dr will bring a below market net rent of $4.3 million per annum and 3% per annum rent reviews. It will sit in the Primewest Media Trust, which will pay investors in the fund a monthly cash distribution of 8% per annum with a forecast total return on equity of 15%.
Primewest executive Chairman John Bond said the acquisition provided the company with an exceptional, counter-cyclical investment opportunity at below replacement cost, and a strong cash flow to help fund its future development potential.
“If the draft Herdsman Glendalough Structure Plan is approved it will be a game changer for the property and opens up significant opportunities for mixed-use as well as commercial development,” Bond said.
“We believe the Herdsman Glendalough area, together with the Stirling City Centre, will form Perth’s second CBD with a vibrant urbanism that embraces mixed use development, dense built form, high frequency public transport and quality public spaces for the enjoyment of residents and employees.
“The Seven West location is the landmark, gateway site in the new precinct and will be developed over a relatively long time frame. There may however be some shorter term opportunities which could be undertaken with the consent of Seven West.”
Bond said Primewest would work with Seven West to identify site and business efficiencies to unlock potential office and mixed use development opportunities in the medium term.
Completion of the sale will is expected in approximately four weeks.
Primewest has over $4 billion of assets under management across all mainland states of Australia and the west coast of the USA and is often a value-add and often counter-cyclical manager.
Earlier this year, the recently listed Primewest picked up the 66 Kings Park Rd office building in West Perth for $33.1 million. On 3,168 sqm of land, the property has a 4,700 sqm building and future redevelopment potential of approximately 1,970 sqm of residential accommodation overlooking Kings Park.
Late in 2018, Charter Hall Long WALE REIT took a half share in the Optima Centre in Osborne Park for $62.6 million. The fully-leased A grade complex of 16,116 sqm across two buildings is located in the Herdsman Business Park and was acquired from BlackRock.
