This article is from the Australian Property Journal archive
EG has picked up a pair of Sydney Olympic Park office buildings for its new fund, the first acquisitions of a $400 million mandate to acquire income-producing real estate near new or upgraded transport infrastructure.
The fund manager bought 6 Parkview Drive and 102 Bennelong Parkway, respectively named Quad 2 and Quad 3, from ASX-listed Growthpoint Properties for $66.1 million.
Their respective book values as of their December 31st valuations were $31.9 million and $31.4 million. Both four-level buildings have short weighted average lease expiries of just over one year and have occupancies of 89% and 28%.
Growthpoint will use the proceeds to pay down debt. The deal was announced within days of the group announcing a share buyback program and lower distributions.
Located 12.5 kilometres west of the Sydney CBD, the site spans 1.44 hectares and offers 9,992 sqm of office accommodation and 283 car bays. It acquired on a net passing yield of 7.2%.
EG’s acquisition is the first for its Urban Regeneration Joint Venture, backed by a global long-term investor.
“The modern A-grade properties are well located within the Sydney Olympic Park precinct which is set to benefit from the construction of major infrastructure projects including the Sydney West Metro which will see the precinct directly connected to the Sydney and Parramatta CBDs via a new station,” EG’s head of capital transactions Sean Fleming said, adding that the recently opened West Connex project has seen improved vehicular connectivity to the precinct.
The deal was negotiated by Tyler Talbot, Graeme Russell and Tim Holtsbaum of Knight Frank and Jason Wright and Chris Bailey of GJS Property via an expressions of interest campaign.
“The assets are in high demand as demonstrated by a number of recent leasing deals from tenants seeking quality space in Sydney Olympic Park,” Talbot said.
Timothy Collyer, managing director of Growthpoint, said the properties no longer fitted within the group’s portfolio of defensive assets.
“Growthpoint’s office portfolio is predominately leased to government, listed or large corporate tenants. As at 31 December 2020, more than 15% of our tenants were based at the Quads, despite the two properties representing only 1.5% of our portfolio by value.
The weighted average lease expiry for the Quads is also notably shorter than our office portfolio WALE.”
Growthpoint retains two office assets in Sydney Olympic Park, fully-let to Samsung and Lion, with an aggregate value of more than $200 million.
