EG’s Ethical Fund Acquires Mascot Police Station15 April 2020
EG Property Group this week confirmed the acquisition of 965 Botany Rd, Rosebery for $19.25 million for its ethical investment fund High Income Sustainable Office Trust (HISOT).
The two-level office building sits on a 4,158sqm site and comprises approximately 2,888sqm of NLA. The property has been wholly occupied by the NSW Mascot Police since January 2009 with a WALE of 5.9 years. Located within the South Sydney office market, it is well-situated between the Sydney CBD and Airport for police operations. Originally known as the Fantasia building, it was developed in the late 1980s.
The Vendor, Helenco P/L a private investor acquired the property in 1997 for $7.25m. Helenco secured the NSW Police in 2010 on an initial 11 year term, which was extended in 2016 to terminate in December 2025.
The passing net rent for the property of approx $1,085,000 per annum, provides EG with a passing yield of approx 5.6%. The lease continues to have fixed 4% per annum increases.
EG exchanged contracts on the property on the 5th March, just as COVID-19 infections were starting to appear in Australia, and settled on the 9th April with funding facilities from the Commonwealth Bank.
The acquisition provided the opportunity for EG to extend their ethical investment philosophy in the Fund by seeking to improve the energy efficiency of assets alongside commercial returns. The asset was targeted for its opportunity to reduce energy consumption and carbon emissions and improve the NABERS energy rating.
“EG is pleased to transact on this asset despite the uncertain times we face as a nation. The asset has a long lease to the Government, providing income security during this period of volatility. EG will focus on cost effective capital works and operational improvements to reduce carbon emissions” said Michael Noblet, Fund Manager, EG.
HISOT targets core plus returns by acquiring Australian office assets with a focus on improving NABERS energy ratings to 4.5 stars through operational and commercially viable CapEx investment. The $200m Fund was launched in 2016 and is supported by investors such as the Clean Energy Finance Corporation (CEFC), Uniting Financial Services and Deakin University among others. In 2019, the Fund welcomed Tasplan Superannuation Fund promoting further commitments from the cornerstone investors.
The fund holds 3 other assets including;
- the National Archives, 1 Queen Victoria Terrace, Canberra acquired in 2018 for $15.47m,
- AMA House, Macquarie Street, Barton, acquired for in 2018 $15.6m and
- 95 North Quay, Brisbane acquired in 2018 for $46.5m.