This article is from the Australian Property Journal archive
Record Realty is continuing to pursue its offshore acquisition strategy – this time into the United States’ prized office property market with a $US223 million ($A300 million) takeover bid for Government Properties Trust.
GPT is a REIT currently listed on the New York Stock Exchange with a market value of $190.74 million, and invests primarily in single tenant properties under long-term leases to the US Federal Government, State Governments, Local Governments, and government-sponsored enterprises.
GPT currently owns 22 properties comprising approximately 202,000 sqm of space with an ascribed value of $610 million.
The portfolio has an occupancy rate of 97.3% and a weighted average lease term of 10.2 years. GPT’s tenants include the US Department of Justice, the Drug Enforcement Administration, the Federal Bureau of Investigation and the Social Security Administration. The trust derives 96.4% of revenue from the US Federal Government and no single agency accounts for more than 11.4% of total space.
Record Realty said the portfolio has been acquired on a passing yield of 7.1%.
Record Realty’s fund manager Stewart Tillyard said this is a strategic acquisition of an exceptionally high quality portfolio that is tailor-made for the Record Realty model.
“RRT now has a global portfolio of properties offering diversification and scale with high quality tenants. This will ensure RRT has a secure income stream to enable the pay down of debt and the delivery of optimum total returns.
“Record Realty is now perfectly positioned to be a market leading listed vehicle,” he added.
GPT’s chief executive Thomas Peschio said will continue in his leadership role of the merged business.
“This is a great success for GPT and its stockholders. The management, staff and board of GPT are very pleased with the international recognition this transaction represents of GPT’s achievements as “America’s Landlord”TM. Our Omaha-based business platform is now positioned with a strong global partner and together we expect to accelerate our growth and broaden the scope of our real estate investments,” Peschio added.
The acquisition was originated and structured by Allco Finance Group. The acquisition is expected to complete in the first quarter of 2007. The board of GPT has the unanimous supported the takeover.
Following the acquisition, Record Realty will increase the size of its portfolio to 41 properties spread across Australia (36%), Germany (27%) and the United States (37%) with a total investment value of over $2.1 billion.
In addition, the portfolio will increase its average lease expiry from 9.2 years to 9.6 and will have approximately 572,000 sqm of net lettable area.
Yesterday, Record Realty also announced the revaluation of its German portfolio to €350 million, which represents a 5.1% increase since acquisition three months ago. Record Realty bought the seven-property portfolio in a sale and leaseback arrange with Deutsche Telekom for €333 million in July.
Wachovia Securities is acting as a financial advisor to GPT’s board of directors and Ballard Spahr Andrews & Ingersoll, LLP is serving as legal counsel. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to Record Realty.
By Nelson Yap
