The Irongate Group had agreed terms with Blackstone to acquire 38 Sydney Avenue, Canberra ACT for $73.75m.
The Property is an A-grade office building comprising 8,901m² of accommodation across four levels including a ground floor cafe in one of Canberra’s prime office precincts. The Property is being acquired on an initial yield of 5.13%.
Blackstone picked up after its 2011 takeover of Valad Property Group in 2011.
The Property is 55% leased to the Australian National Audit Office, a department of the Australian Federal Government functioning as the national auditor for the Parliament of Australia with 13.5 years remaining on the lease term and annual fixed rent reviews of 3.5%.
The balance of the office space (3,920m²) is subject to a 24-month non-refundable gross rent guarantee provided by the vendor, resulting in a WALE for the Property at completion of 8.5 years.
IAP CEO, Graeme Katz, said, “This transaction builds on IAP’s track record of acquiring strategically located, good quality income-producing properties. The Property has had approximately A$12.6 million spent on fit out and refurbishment works in the last two years including a full atrium lobby upgrade, the addition of end-of-trip facilities and refurbishment of on floor amenities.”
“The Canberra office market proved resilient through the COVID-19 pandemic, underpinned by the government sector. The Property is located 500m from Parliament House in a precinct with A-grade vacancy of less than 1%, and this, together with the Property’s NABERS energy rating of 4.5 stars and large floor plates that are easily subdividable, gives us confidence with respect to future leasing activities.”
IAP has today launched a fully underwritten Placement of 34,013,605 new fully paid ordinary stapled securities to raise approximately A$50 million at a fixed Issue Price of A$1.47 per New Security, representing a 3.9% discount to the last closing price of A$1.53 on the ASX on Friday, 11 June 2021, and a 6.2% FY22 distribution yield.
The funds raised under the Placement will be used to part fund the Acquisition, with the balance funded under a new tranche of the debt facility provided by Westpac, ANZ and PGIM.
Commenting on the Placement, Katz said, “The placement, the proceeds from which will be used to partly fund the Acquisition, provides IAP with the opportunity to increase liquidity while preserving balance sheet capacity for future growth.”
Including the impact of the Acquisition and the Placement, FY22 DPS guidance remains unchanged at 2% – 3% growth, and FY22 FFO per security expected to be in line with consensus.