This article is from the Australian Property Journal archive
BLACKWALL Property Trust will acquire WOTSO Workspace, just several months following its parents company’s demerger with the co-working business, as the pandemic puts plans for a spin off trust on ice.
BlackWall Limited announced on Friday that “in light of recent changes in the economy” the BlackWall Property Trust (BWR) would also take on certain real estate assets currently held by Pelorus Private Equity Limited, and for BWR to be restructured to form a stapled security structure where BWR units are stapled to shares in WOTSO and the Pelorus real estate assets.
“This proposal replaces the previous strategy to undertake a standalone IPO of the WOTSO business, but it does not preclude this happening in the future.”
“Further details of the transaction will be forthcoming however it is expected the acquisition will secure WOTSO’s growth trajectory without the need to raise additional capital in an uncertain market.”
BlackWall deferred all rents for its WOTSO Workspace properties in March, part of a move to offer commercial and hospitality tenants relief in a bid to maintain their tenancy throughout the coronavirus crisis. Co working spaces have been heavily impacted by social distancing guidelines. Nine Media reported last week that one-time sector leader WeWork had been seeking rent relief from landlords, recording just 2% of usual footfall in Melbourne and 20% in Sydney, while Brisbane and Perth have returned to about 90%.
BlackWall expects the transaction to provide liquidity to WOTSO shareholders and provide operational efficiencies with WOTSO’s largest landlord.
“Equally, BWR is likely to benefit from gaining an immediate tenant for potential acquisitions of vacant property, participating in the higher rents achievable through flexible space leasing and giving BWR tenants the option of a flexible space or traditional lease offering.
“In addition, it is anticipated that the acquisition will be an effective mechanism of transitioning interests in two properties from Pelorus (the original parent company of BlackWall) to the BWR portfolio.”
They are 850 Woodville Rd in Villawood, where BWR already has an ownership interest, and 120 Mulgoa Rd, Penrith.
WOTSO is expected to represent less than 10% of an expanded group’s assets. On completion, the group is expected to have gross assets approaching $400 million.
The acquisition of the WOTSO business will be undertaken as a scheme of arrangement, which requires both shareholder and court approval, and is expected to be finalised in early 2021.
