This article is from the Australian Property Journal archive
THE GPT Wholesale Office Fund has pre-purchased a 50% interest in a Sydney CBD office development from Grocon, in a deal where Grocon will take the development risk and provide rent guarantees.
The office development at 163 Castlereagh St Sydney, is a 42-level tower comprising 57,800 sqm in total with 54,450 sqm of office space and 3,350 sqm of retail space plus 100 car spaces.
GWOF will co own the asset along with Grocon and LaSalle Investment Management, 25% each.
GPT’s CEO Michael Cameron said the purchase is consistent with the fund’s strategy to grow the business where appropriate opportunities arise.
GWOF’s fund manager Martin Ritchie said the deal is forecast to deliver an unlevered IRR of approximately 11% with a capitalisation rate of 6.75%.
The $333 million will fund the construction of the project on a cost to complete basis, with Grocon taking the development risk and providing rent guarantees for the fund.
“GWOF’s investment in this fantastic building, located in the heart of Sydney’s CBD with extensive harbour views, is consistent with the fund’s strategy to own top quality Australian office assets and will increase our premium grade weighting from 57% to 62% upon completion,” he added.
Scheduled for completion in mid 2013, the project is 76% pre-committed to ANZ Bank and law firm Freehills on 15 and 10 year leases respectively, providing a weighted average lease duration of 12.5 years.
Australian Property Journal
