Weekly Transaction Update – 12th October 201812 October 2018
This week we recorded 25 major transactions worth $1.2 billion.
Centuria Snap up Hines Portfolio
Centuria this week announced that its Centuria Metropolitan REIT will acquire a 100% interest in three of the assets in the Hines Portfolio: 818 Bourke Street in Melbourne's Docklands, 825 Ann Street and 100 Brookes Street in Brisbane's Fortitude Valley. The REIT will also acquire a 25% interest in 465 Victoria Ave Chatswood with prominent co-investor Paul Lederer acquiring the remaining 75%. The total transaction, worth $645M was priced on yields varying from 5.25% for Docklands to 6.25% for the two Fortitude Valley assets. The total NLA of the 4 assets is 67,614sqm of which approx 2,700sqm (4%) is currently vacant. Centuria will receive a monthly rental guarantee from the Vendor for the currently vacant tenancies for 18 months with part of the purchase price withheld on settlement to cover the liability. The relationship between Paul Lederer and Centuria continues with similar co-ownership deals struck at St Leonards and Adelaide. The transaction structure works well for both parties as Paul Lederer's stake provides some protection for CNI from a takeover of the Centuria Metropolitan REIT as a result of the pre-emptive provisions in the co-owners deed which allows Paul to take control of the asset if CNI is no longer the RE of the trust or if someone takes 30% or more of the units in CNI or the Trust.
CorVal Attempt to Sell Val Add Opportunity in Chatswood
Corval are hoping to be selling 67 Albert Street Chatswood to Singapore's Mapletree group for around $150M. The tower is 97 per cent leased to tenants such as Westpac, GPNSW and Du Pont Australia with a net income of $9M and WALE of three years. The site also comes with a DA approval for a second 15 storey tower, however there may be some doubt over the second tower. The whole land is leased on a 99-year lease from Willoughby Council, which was signed in 2013, and despite council officers granting permission for the project to be assessed by Northern Sydney Planning Panel in December 2017 (since approved), Willoughby Council has now unanimously opposed the development and intend to write to CorVal to advise that the ground lease does not permit the additional development. Mapletree are reported to be in DD, however the DA issue may see this drag on.
Two Hurstville Retail Centres Sell
Mike Figg's Cerno investments group have sold off the Hurstville Central Shopping Village which sits above the Hurstville Rail Station. The Centre sits on a leasehold title with 42 years remaining, and was acquired by a US Private Equity Group for $119.5M reflected a passing yield of 6.07 per cent. Cerno bought the site in 2006 with the support of Ashe Morgan and spent $15 million on renovations that transformed the asset from a neighbourhood-based super centre into the current two-level shopping centre with concourse retail at ground level and service retail and car parking above. Cerno had price expectations of around $130M.
Also in Hurstville, and directly opposite the Hurstville Central Shopping Centre, an arcade of 26 strata tenancies at 282 Forest Rd sold this week for $34M. The vendor and purchaser are believed to be associated with the Coombes Property Group. The site has an approval for the development of a new building comprising 3 x levels of retail and 11 x levels of commercial.
Coombes Property Group are also developing a 23-storey 34,277 sq m building in Paramatta, on a site which Coombes and JV partner Divas Group have owned for over 20 years.