This article is from the Australian Property Journal archive
NEWMARK Property REIT (NPR) has reached an agreement with Clarence Property to press ahead with its purchase of an Officeworks-anchored large format retail centre in Brisbane that was heavily damaged by a suspicious fire.
Newmark, which listed late last year, acquired the 2.8-hectare site in Underwood, 20 kilometres south east of Brisbane’s CBD, in July for $57 million in an off-market deal with vendor Clarence Property.
As well as Officeworks, the 11,112 sqm complex has a Supercheap Auto, Sydney Tools, and Best Friends Pets and a weighted average lease expiry of six years.
A fire broke out at Officeworks on 23rd August while customers and staff in the store, before it was totally destroyed. No one was injured, and Queensland Police deemed the fire to be suspicious and released footage in October of a vehicle they believed to be related to the incident.
Building 4, housing Officeworks and a number of food and beverage operators, was significantly impacted and NPR threatened to pull out of the deal.
However, the parties have come to an agreement that will see the purchase shaved down to $56 million, with a partial payment of $46 million to be made this week and the final $10 million payable through milestones being reached through reinstatement of the building, commencement of trading by affected tenants and rectification of defects.
Clarence Property has provided a rent guarantee over the gross passing rent derived from tenants within the building that was damaged by the fire, from settlement through to completion of building works and re-commencement of rent.
It will also deliver reinstatement of the building, appointing Inspired Built Pty Ltd, which delivered the Super Cheap Auto tenancy, with the construction sum at $5.9 million.
Completion is expected in September.
The revised deal comes in on a capitalisation rate of 5.25%.
“We are pleased to have reached an agreement with Clarence Property regarding the Underwood property. We are very pleased to secure this high-quality large format retail asset, with category-leading tenants in a sector that continues to display strong income returns and investment market appeal,” said Ed Cruickshank, NPR fund manager.
“The acquisition is complementary to NPR’s strategy and existing portfolio and provides the exposure and diversification of geography and defensive and growing income profile that NPR is seeking to provide its investors.
“We look forward to working collaboratively with Clarence Property and Officeworks through the works period and are excited to see a brand-new building completed in Q3 CY2023.”
