IOOF Investment Management have acquired 18 Honeysuckle Drive, Newcastle from developer Doma Group for $52.5M.
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The 6,524sqm A Grade office building is 100% leased to a 7 corporate and Government tenants providing a weighted average lease expiry of 6.8 years. The property generates a net annual income of $3,235,354, reflecting a 6.2% passing yield and a capital value of $8,000/sqm.
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The sale of the asset was brokered by Colliers.
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The Doma Group acquired the site in September 2015 for approx $4.85m from the Hunter Development Corporation (HDC) following the development approval in June 2015.
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Doma Group developed the building, along with the neighbouring residential apartment building containing 71 units (which together share a carpark entrance via a stratum arrangement), at a cost of circa $39m.
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The commercial building which was completed in 2017 was designed to meet a 4.5-star NABERS Energy Rating and a 5-Star Green Star rating. The Doma Group also settled an acquisition this week for their next project across the road at 35 Honeysuckle Drive.
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Doma paid $15.5m for the 5,200sqm site which fronts the Hunter River and will ultimately contain 92 apartments with ground floor retail units. Doma Group obtained development approval in June this year.
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The buildings across the Honeysuckle precinct are built above a patchwork of disused mine shafts which have increased the development risks significantly.
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The HDC had previously expected developers to bear the risks, however after years of inactivity, HDC developed a mine subsidence mitigation plan which saw themselves undertake the necessary grouting works.