This article is from the Australian Property Journal archive
THE Australian Unity Diversified Property Fund has offloaded its Parramatta office asset for $87.251 million, as the fund works towards repositioning its portfolio.
The $615 million fund sold the 7352sqm eight-storey office building at 20 Smith Street at a premium of circa 4.5% against its book value as at December 2021, after exchanging binding contracts on 26 April.
“The sale of 20 Smith St Parramatta increases the Fund’s weighted average lease expiry to 8.4 years from 7.5 years with sale proceeds ultimately being used to fund the two key development projects through to completion,” said Jonathon Senior, fund manager for the Australian Unity Diversified Property Fund.
This most recent disposal follows the fund’s sale of a Victorian industrial property at 19 Corporate Avenue in Rowville, completed in December 2021 for $27.85 million at a 26% premium against book value.
Senior added that both sales reflect the effective management strategy of the portfolio, in line with the fund’s re-positioning strategy to recycle capital into development projects at neighbourhood shopping centres in Blackburn, Victoria and Busselton, Western Australia.
Following the sales, investors will receive a special distribution on 30 June 2022, on top of the fund’s regular income distribution payment.
Meanwhile, Australian Unity Office Fund (ASX:AOF) have that announced that Property NSW (PNSW) would not renew its lease as the major tenant of the fund’s 10 Valentine Avenue asset in Parramatta.
The current lease term is due to expire on 30 June 2022, though from 1 July PNSW have requested to hold-over for up to three of the building’s 14 levels, while vacating the balance.
As a result of these changes at the asset, AOF has commissioned an independent valuation for its 2-10 Valentine Avenue asset, resulting in a revised valuation of $120.55 million, a decline of $28.95 million since 31 December.
Sitting in the centre of the Parramatta CBD and adjacent to the Parramatta Bus and Railway Interchange, the asset comprises more than 16,000sqm of lettable area at the 10 Valentine Avenue building.
Additionally, on the same title is the six-level connected freestanding carpark at 2 Valentine Avenue.
AOF is now looking into repositioning and development strategies for the island site, including developing the two properties into one campus style office with more than 4,000sqm office space; developing 2 Valentine Avenue into a 28,000sqm 24-level office tower; and the underway development application to expand 10 Valentine Avenue’s lettable area to 20,000sqm.
The repositioning of 10 Valentine Avenue would potentially see a new façade at the asset, allowing for floorplates to be increased to circa 1,500sqm.
Despite changes to asset values, AOF has reaffirmed its FY22 funds from operations guidance of 18.0 18.5 cents per unit and distribution guidance of 15.2 cents per unit.
