Offshore Investors, syndicators buy up

Feb 8th, 2013

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WA Business News

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Perth's property market has had a busy start to the year, with offshore investors and local syndicators negotiating five purchases worth about $230 million.


The largest outright purchases were by two offshore investors, which have bought Herdsman's largest office building and a historic shopping arcade in the city centre.


Syndicators Lester Group and GM Property Group have also been active, buying an office building in Belmont and a warehouse in Canning Vale respectively.


The fifth major deal to be announced this year was the internal Charter Hall transaction involving the sale of a 25 per cent stake in the Coles Distribution Centre at Perth Airport.


The largest deal was the $106.7 million purchase of the Optima Centre, an A-grade office complex in Herdsman with a net lettable area of 16,116 square metres across two buildings and 500 car bays.


The buyer was MGP Asien Spezialfonds, a German investment fund set up by private equity group MGPA to target purchas4es in the Asia Pacific region.


MGPA Australia director Hamish MacDonald said he expected increased investment demand for high-quality properties, leading to an attractive (supply-demand) dynamic and rental growth potential.


"We believe there is a disconnect between the high investment yields available in Perth and the potential for rental growth relative to other markets in Australia," he said.


The Optima Centre is mostly (83 per cent) Leased to government tenants, and delivers a passing yield of 8.6 per cent.


Former owners ABN Group and Macquarie Group entities sold the four-year-old building through an off-market competitive process.


The deal is subject to regulatory approvals and the buyer obtaining finance.


Singapore-based Starhill Global REIT has added to its Perth retail property portfolio by acquiring Plaza Arcade in central Perth for a price of $48 million.


The fund already owns the adjoining David Jones building.


YTL Starhill Global chief executive Ho Sing said Plaza Arcade’s yield was 7.8 per cent, similar to the David Jones building it bought in 2010.


Mr Sing said there were potential synergies between the buildings, which have unutilised space on the upper levels.


The vendors were local investors Con Berbatis and George Atzemis, who owned Plaza Arcade for 10 years.


Lease Equity managing director Jim Tsagalis, whose firm manages the property, negotiated the sale.


Plaza Arcade has 30 tenancies across a net lettable area of 25,000 square feet, and is currently 97.6 per cent occupied.


It's expected the acquisition will be completed within the first quarter of 2013. The purchase price was equal to an independent valuation conducted by Colliers.


A Lester Group syndicate has closed one month ahead of schedule, after buying 181 Great Eastern Hwy for $19.1 million.


The 10,700 sqm property includes a 4,000 sqm office building that is fully leased to mining services company NRW Holdings through to 2018.


Lester Group director Russell Lester said there was a strong response by investors, who where set to receive a 9.5 per cent-plus income yield in the first year.


Mr Lester said there was considerable opportunity in Belmont.


"The ability to secure quality office space and amenities with better parking ratios at lower rents means we're seeing an increasing number of mining and industrial services companies making the shift to Belmont from the CBD and West Perth," he said.


The deal was the fourth successful syndicate by Lester in two years, and will be followed by its first interstate syndicate, with due diligence under way on a $22 million property on St Kilda Road, Melbourne.


In the industrial sector, GM Property Group has closed a $10.5 million deal on a warehouse in Canning Vale. The property at 28-32 Gauge Circuit marks the fourth syndicate for GM Property, headed by former Lester Group executives Blair Gerrard and Simon Munckton.


The 18,356sqm property is fully leased to Mitre 10 and logistics group Parkcentre Marketing Services.


It was secured in an off-market deal brokered by Jones Lang LaSalle's Nick Goodridge, at a passing yield of 8.75 per cent.


The fifth major Perth property set to change hands in the Coles Distribution Centre.


The newly established Charter Hall Direct Industrial Fund N2 has announced plans to acquire a 25 per cent interest in the Coles centre for $45.9 million.


The sale price reflected the latest independent valuation of the entire property of $183.5 million by Savills in November 2012.


The balance of the Coles property will be retained by two other Charter Hall funds.

Source: www.wabusinessnews.com.au

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