AIMS APAC REIT to Invest $450m in Woolies HQ

Singaporean fund manager AIMS APAC REIT has confirmed their intention to acquire the Woolworths headquarters in Bella Vista, north-west Sydney at a price believed to be c$450m.

The REIT is in exclusive due diligence to buy the asset from Inmark Asset Management who acquired the property from Mirvac in 2016 for $336m.

The REIT has indicated that no decision has yet been made, and no binding agreement has been entered into at this stage.

CBRE and Colliers were appointed in June by Inmark to find a buyer for the 44,911 sqm building on 1 Woolworths Way, Bella Vista. The Woolworths lease has at least another 10 years on the current term.

There is also around 28,000 sqm of commercial office floor area available to be developed.

A sale at the expected price of $450m would represent a capitalisation of just over 5% compared with the 6.07% Inmark paid in early 2016.

Whilst Woolworths has a sizable investment in equipment as a Tenant at the property, there is no guarantee that they will remain at the location at the end of the term. The property was purpose built for Woolworths and it may be difficult to replace them should Woolworths elect to leave. As a result the lease renewal probability and re-leasing costs and time would be significant factors to consider in a 10 year cash flow model.

Other parties reviewing the opportunity included Charter Hall, Growthpoint Properties, LaSalle Investment Management and Centuria Capital. We spoke to one of these groups who felt that the re-leasing assumptions they were prepared to underwrite likely priced them out of contention.

The sale follows the exit of a number of Korean investors who are selling off commercial properties for steep profits having acquired them in the early stages of the property boom. In May, AIP Asset Management, sold a $780m portfolio of four buildings to the acquisitive Charter Hall.

Set on nine hectares of land, the site comprises three separate office buildings, linked by a central atrium. The campus includes office space, an on-site Woolworths Metro supermarket, gym, café, sporting facilities, and what is described as “a significant data center.”

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About Warwick Petschack

Warwick has over 25 years of property investment and management experience. Principally responsible as Managing Director for Capital Management Australia and Joint Managing Director for Chauvel Capital Partners and Editor of Australian Property Markets News.

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