This article is from the Australian Property Journal archive
RAPTIS Properties has taken Capital Property Funds (CPF) to court over the failed $58.6 million sale of an Adelaide office tower, and fears it would suffer a loss in the falling market if it needs to put the asset back up for sale.
Raptis Properties put 63 Pirie Street to the market in the middle of last year after more than 24 years of ownership. The 11,211 sqm, 11-level and basement building had been heavily repositioned. It was offered with tenants including Macquarie Group and Lockheed Martin with a passing annual income of $2.52 million – $4.33 million fully leased – a 3.5-year weighted average lease expiry.
As reported in The Australian, court documents show that the CPF agreed to buy the building in November subject to obtaining finance, and paid a $1.1 million deposit with finance obtained by 7th December.
“On 7 December, 2022, the lawyer for the respondent wrote…advising that…special condition 30 of the contract…had been satisfied by the respondents having obtained a loan for the purpose of it completing the acquisition of the property pursuant to the contract,”, the statement of claim said.
“As a consequence…the respondent’s obligation pursuant to the contract…were unconditional.
“The contract was in all respects unconditional on and from 7 December, 2022.’’
The claim said the money was not paid, however.
Settlement was due on 24th February, but Commonwealth Bank’s use of the PEXA property portal meant it was rescheduled to the 27th.
The property is still unsold and Raptis said CPF is in breach of its contract. It is concerned about a loss of capital value if the property goes back to the market.
Raptis CPF to either pay the full amount, or pay costs including interest, holding costs, costs incurred by a new sales process and damages for breach of contract.
Barrenjoey analysts have warned office tower prices could come off by 15% to 20%. Colliers is expecting capital values to drop by an average of 10% from peak-to-trough, before the market recovers in 2024, a much less turbulent trajectory than the GFC which saw some assets suffer 25% in devaluations.
