This article is from the Australian Property Journal archive
CHARTER Hall's Core Plus Office Fund, Telstra Super and Canada's Public Sector Pension Investment Board (PSP Investments) have acquired Bankwest Place and the Raine Square shopping centre in Perth’s CBD for $458 million from Luke Saraceni's receivers.
The property has been sold despite a pending court case between Saraceni and his lenders. The asset was purchased from receivers KordaMentha, nearly two and half years after it took over from Saraceni’s Westgem Investments Pty Ltd, which failed to make a $50 million debt repayment at the end of 2010 to Bankwest and the Bank of Scotland.
Saraceni accused Bankwest of breaching its obligations under his financing agreement and launched a $200 million-plus damages claim against the Commonwealth Bank subsidiary.
The sale price is less than the $500 million it cost to build the project. Bankwest Place is the Perth CBD’s newest office building and is 100% leased to Bankwest, whilst Raine Square is its adjoining retail component and the CBD’s largest retail space.
Charter Hall joint managing director David Harrison expressed optimism for Perth’s future in the wake of the mining boom peak.
“Despite the slowdown in the resource sector, we are confident about the longer term outlook for Perth and are attracted to the security of a non-resource tenant of Bankwest’s calibre in this active precinct,” he said.
“We also believe we can add value to the non-office components of the complex, utilising our retail experience to extract greater value for our investors,” he added.
The complex comprises 61,564 sqm on a 12,316 sqm block with street frontages to William, Murray and Wellington streets.
A 5-star NABERS Energy rating is forecast for Bankwest Place, which comprises 45,000 sqm across floorplates measuring 1,747 sqm to 2,242 sqm. It is leased to Bankwest on an initial term 12 years ending 2024, plus options, with 4% annual rental increases and four-yearly market reviews capped at 10%.
Harrison said Charter Hall was expecting a compound growth rate of 5% per annum for the office rental income, representing over 70% of the market rental income profile of the whole complex.
The 9,831 sqm, three-level retail component is anchored by a 15-year lease to Coles and is linked to the William Street train station via an underground tunnel. It opened in 2012 and comprises 67 tenancies with a weighted average lease expiry (WALE) of approximately six years.
The building also includes two hotel complexes totalling 5,736 sqm, leased for a further eight years and offer future expansion potential.
“The acquisition is in line with our strategy of raising and deploying capital into core real estate investments and continues the momentum of matching our partners’ capital with attractive investment opportunities,” Harrison said. “CPOF benefits from an additional high quality modern office complex, with a 10.5 year office anchor WALE which also enhances the CPOF earnings growth profile,”
The sale was negotiated through CBRE and Jones Lang LaSalle.
CBRE executive managing director Scott Gray-Spencer said the sale had been hotly contested.
“It was a highly competitive process with many offshore and local groups competing to secure this trophy asset. Investors in today’s market are searching for high quality CBD properties such as Bankwest Place which offer secure, blue chip tenancy covenants and future growth potential,” Gray-Spencer said.
The acquisition will have negligible impact for Charter Hall’s FY13 result and is expected to be earnings accretive in FY14. It does not require any co-investment from Charter Hall.
Later yesterday Charter Hall announced a distribution of 10.4 cents per security for the half-year ending June 30, a 14.3% increase on the distribution on the previous corresponding half-year. The total distribution for FY13 will be 20.2 cents per security, an 11.0% increase on the 18.2 cps distribution for FY12.
It also said it had secured $126 million of the $150 million target of its equity raising for the Core Plus Industrial Fund, with the proceeds to reduce debt and fund acquisitions and pre-leased projects on existing land banks.
Property Review
