This article is from the Australian Property Journal archive
ING Office Fund and its joint venture partner have sold the Park Tower asset in Virginia to NYSE listed Northrop Grumman Corporation.
ING CEO Tino Tanfara said Verizon have been slowly vacating the building located at 2980 Fairview Park Drive, Falls Church, Virginia, over the past two years.
“As such we implemented a repositioning strategy to take advantage of the building’s high quality and prominent location. This process has been very successful in securing the major tenant enquiry in the market. The decision to in turn sell our interest was based on the superior return it will deliver to IOF unitholders,” he added.
The sale is expected to be unconditional by the end of August 2010.
At the same time the fund has recorded a 0.5% increase in the value of 25 real estate assets as of June 30.
In total, 12 assets were independently valued, the fund’s weighted average capitalisation rate has remained steady at 7.5%.
Tanfara said there are now clear signs that values have stabilised across most markets.
“In general, the positive improvements are attributable to both solid occupational conditions in select Australian markets, and investment demand in select US locations,” he continued.
Over the six month period to June 30, values increased by 0.8% with the weighted average capitalisation rate remaining steady at 8.0%. The key driver of the improvement in portfolio values was the improved market outlook in Sydney and Melbourne driven by anticipation of improving rents and stronger tenant demand in the medium term.
In the US, the value has risen by 1.6% driven primarily by a 40 basis point firming in the weighted average capitalisation rate to 6.9%, from strong investor demand and capital flows in New York, and Washington DC.
Tanfara said management is continuing to work with tenants in relation to the fund’s vacancy in Boston and expects to make more progress over the coming quarter.
However in Europe, the value of assets declined by 1.3% and the average capitalisation rate remained steady at 6.4% but was offset by weaker office market fundamentals and re-letting risks. The movement was largely in relation to the Fund’s 13.4% (€251 million) investment in the Dutch Office Fund (DOF).
“We continue to be in discussions with potential acquirers of our units in DOF, in line with our medium term strategy for this investment,” he added.
Australian Property Journal
