This article is from the Australian Property Journal archive
GROWTHPOINT Properties Australia has bought an office development in Mulgrave which has been preleased to BMW Australia, for $50.9 million on 7.25% yield.
Growthpoint bought the land and development to be known as Building C, 211 Wellington Rd Mulgrave in Melbourne’s south-east, from Frasers Property and Commercial & Industrial Property.
The property will comprise a five-storey office building with a lettable area of 10,295 sqm as well as a five-level car park of 598 spaces. The building will be 47% leased to BMW Australia Finance, a wholly owned subsidiary of Germany’s BMW AG.
BMW signed a five-year term from practical completion, with two further options of five-years.
Frasers Property and CIP will provide a five-year rent guarantee for any part of the remainder of the building not leased at practical completion, expected in late 2016. The rent under the BMW lease and the rent guarantee provided by the Developer each increase by 3.25% per annum. Growthpoint will receive a coupon of 7.25% per annum on amounts paid until practical completion.
Under the deal, Growthpoint will acquire the 1.11ha site for $7.0 million and will pay the balance of $43.9 million as works are completed.
The property adjoins Building B 211 Wellington Rd, which Growthpoint acquired in late 2014 for $62.6 million, on a passing yield of 7.75%. The property is already 85.6% leased, comprising 70.4% to Monash University and 15.2% to other parties leaving just 14.4% under a rental guarantee.
Australand acquired the 211 Wellington Rd site in 2007 for approximately $15 million. The 3.47ha site has the potential to accommodate up to 44,500 sqm office NLA.
Growthpoint’s managing director Timothy Collyer said this will be the ninth deal where Growthpoint acquires land and then funds the development of fully or substantially pre-leased improvements until completion.
“Development fund-throughs provide Growthpoint with new buildings, long leases to excellent tenants, potential valuation upside and reduced transaction costs.
“We are pleased to be funding another Frasers and CIP development, the ninth development fund-through Growthpoint has undertaken and the second in Mulgrave.
Growthpoint was attracted to this investment because of the property’s quality design, high green credentials, prominent and established suburban location and the major tenant, BMW Australia Finance Limited, a new tenant to the property portfolio.
“Acquisition of this brand new office building, with no significant capital expenditure in the medium term, remains consistent with our strategy to invest in modern office buildings leased to quality tenants.” Collyer said.
Australian Property Journal
