Growthpoint has announced that it has entered into a new 25-year lease with the New South Wales Police Force (NSWPF) commencing 1 January 2020.
NSWPF occupy 32,356 square metres of A-grade office space and 444 car spaces at the Curtis Cheng Centre, 1 Charles Street, Parramatta, NSW. The new lease will replace the current lease which was due to expire in May 2024.
Under the new lease, the commencing annual rent will be approximately $21.1 million and the rental income will continue to escalate by 3.5% per annum.
As part of the new lease arrangements, Growthpoint has entered into a Refurbishment Works Deed with NSWPF. Growthpoint expects to fund $44 million of works to enhance the NSWPF headquarters, which the NSWPF plan to
undertake over the next few years. The works may include a new office fitout, as well as upgrading the existing bathrooms and base building services.
Due to the new lease, the property's value is expected to increase to $420 million, 19% higher than its June 2019 book value and 74% higher than its June 2014 purchase price of $241 million.
The NSWPF are Growthpoint's largest single tenant. Approximately 8% of Growthpoint's income is derived from their lease. The new 25-year lease will increase Growthpoint's proforma portfolio weighted average lease expiry (WALE) from 4.9 years as at 30 September 2019 to 6.5 years.
The positive pro-forma impact on net tangible assets (NTA) is 8.7 cents per security. The new lease arrangements do not change Growthpoint's FY20 guidance.
Timothy Collyer, Growthpoint's Managing Director, commented, "We are delighted to have agreed a new 25-year lease with the NSW Police, building on our existing relationship. Over the last five and a half years, we have gained an understanding of NSWPF's occupational needs and by working closely together, we have been able to tailor a solution to ensure the facility meets their needs now and into the future. We were one of the early movers to enter the Parramatta office market, as we could see its potential to become Sydney's second CBD. The outlook for Parramatta remains positive and we are pleased to have consolidated our position in this growing market."
Growthpoint and the NSWPF Property Group negotiated the new lease directly.
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