Knight Frank Valuations

Transcription

Knight Frank
Valuations
National Commercial Transactions
Autumn 2013
Commercial Team
David Castles
State Director
[email protected]
D +61 (0)2 9036 6648
States serviced: New South Wales / National
Office based: Sydney
Tom Phelan
Divisional Director
[email protected]
D +61 (0)2 9028 1131
States serviced: New South Wales
Office based: North Sydney
Adam Elias
Associate Director
[email protected]
D +61 (0)2 9036 6771
Lachlan Graham
Divisional Director
[email protected]
D +61 (0)2 9028 1132
Office based: North Sydney
Tim Miles
Associate Director
[email protected]
D +61 (0)2 9036 6701
Greg Cummins
Director
[email protected]
D +61 (0)2 6221 7885
States serviced: ACT
Office based: Canberra
Peter Zischke
Associate Director
[email protected]
D +61 (0)7 3246 8811
States serviced: Queensland
Office based: Brisbane
Michael Schuh
Director
[email protected]
D +61 (0)3 9604 4726
States serviced: Victoria
Office based: Melbourne
Joseph Perillo
Joint Managing Director
[email protected]
D +61 (0)3 9604 4617
States serviced: Victoria
Office based: Melbourne
Alex Smithson
Consultant Valuer
[email protected]
D +61 (0)8 8233 5281
States serviced: South Australia &
Northern Territory
Office based: Adelaide
Nick Bell
Director
[email protected]
D +61 (0)8 8233 5242
States serviced: South Australia & Northern Territory
Office based: Adelaide
Marc Crowe
Director Consultancy
[email protected]
D +61 (0)8 9325 2533
States serviced: Western Australia
Office based: Perth
Introduction
Knight Frank Valuations again have pleasure in providing our compiled national commercial transactions booklet for your
reference.
The transactions enclosed cover an analysis of major commercial investment grade sales occurring over 2012 and into 2013.
Whilst these analyses are always available singularly on request as and when they occur, we believe it is important to collate these
sales in one document in order to provide an overall picture on the national commercial investment market. Also, whilst we
recognise that these sales are analysed by a range of companies and practitioners (including sales agents), the analyses within
reflect a consistent methodology and are not countersigned or in any way influenced by parties outside of Knight Frank
Valuations. We also note that where details are confidential at the request of clients, we have not disclosed within and
hence, some known sales may not be included (however, details are generally held by Knight Frank Valuations).
Following a return to confidence in the investment market in 2011, there was a slowing in investment activity in early to mid 2012.
However late 2012/early 2013 saw an increase in transaction volumes, particularly from the A-REITS’s and superannuation funds
and this activity is expected to continue into 2013/2014.
As alluded to in our last publication of this document, it appears that purchaser depth has now increased due to a number of
factors including the favourable weighted average cost of capital and a closing of the NTA gap for many A-REITS. This has
increased competitive pressures in “core” markets and recent sales within the prime market for select assets (ie. typically upper APremium Grade with secure and stabilised tenancy profiles – ie. “upper prime”) have tended to indicate compression of say 0.25%
(25 basis points) over the past 6 months. This follows on from earlier compression reflected by select sales over 2010-2011 of
approximately 25 basis points. On average, the market for these “select” assets is considered to have recovered 0.50% (50 basis
points) since the market trough. Whilst many of the market leading sales have recently occurred in Melbourne, the Sydney graph
below provides an example of yield compression in the prime market relative to the longer term average.
Introduction
A further comparison of some benchmark sales within the “upper prime” market is noted in the graph following. These sales are
not intended to be in date order, and provide only a snapshot of the analysed core market yields and WALE’s for each asset.
Core Market Yield Analysis
National Prime Sales
14.00
7.25%
12.00
7.00%
6.75%
WALE (yrs)
10.00
CMY %
8.00
6.00
6.50%
4.00
6.25%
2.00
0.00
6.00%
400 George 150 Collins 850 Collins
242
8 Exhibition Grosvenor
St, Bris
St, Melb
St, Melb Exhibition St, St, Melb
Place, Syd
Melb
126 Phillip
161
St, Syd
Castlereagh
St, Syd
Whereas the “prime” market has reverted back to its 10 year average, the analysis below indicates that the “secondary” market has
remained above its 10 year average (ie. 80 basis points as per the graph below). This is considered to be largely associated with
the more limited buyer depth for secondary assets unlike the “prime” market which has been supported to a degree from offshore investors and local funds. Please note that for example purposes the data below is based upon Sydney CBD sales and
averages only.
Historic Yield Trends - Prime v Secondary (Sydney CBD)
9.00%
8.50%
8.00%
7.50%
-80 bp
7.5%
7.00%
6.50%
6.7%
6.00%
5.50%
5.00%
4.50%
Prime (Premium & A)
Secondary
Prime - 10yr Average
Secondary - 10yr Average
The above chart reflects general yield trends based upon representative benchmark transactions within the CBD as is not meant to represent exact yield levels
Dec-12
Apr-12
Aug-12
Dec-11
Apr-11
Aug-11
Dec-10
Apr-10
Aug-10
Dec-09
Apr-09
Aug-09
Dec-08
Apr-08
Aug-08
Dec-07
Aug-07
Apr-07
Dec-06
Aug-06
Apr-06
Dec-05
Aug-05
Apr-05
Dec-04
Apr-04
Aug-04
Dec-03
Aug-03
Apr-03
Dec-02
4.00%
Introduction
The yield premium/margin above the 10 year average is also particularly notable within “non-core” suburban locations making
pricing within these markets look particularly attractive versus historical averages. This margin / premium is however unlikely to be
redressed to any notable extent until greater institutional and mid-tier /smaller fund support again emerges for these locations.
There is evidence of this emerging over the past 6 months, however, activity remains patchy and selective. Some sales that are also
occurring are complicated by the nature of the sale (eg. distressed sales; pre-emptive rights being exercised) and these need to be
distinguished from other sales in the market. Accordingly, pricing within these markets remains difficult given the wide trading
band and differing vendor/purchaser motivations.
A historical analysis of sales within the Sydney CBD secondary, North Sydney and Metropolitan Markets is below and
demonstrates the relative yield margin versus historical averages. Please note that the analysis below does not include all sales,
only representative trend sales in each market.
Introduction
We hope the analysis within is of assistance to you as we move into 2013.
Regards
KNIGHT FRANK VALUATIONS
DAVID M CASTLES
Director
Sydney Commercial Sales Analysis
Sales Analysis
Sales Analysis
9 Castlereagh Street, Sydney, NSW
Sale Date
February 2013
Sale Price
$172,500,000 (headline price)
Vendor
Stockland
Purchaser
Charter Hall Group
Description
32 level, Seidler designed, A –grade office tower (circa 1989) providing a central atrium
extending up through the building. Full lobby refurbishment recently completed at a cost
of circa $8.5 million. The building provides ground level retail, atrium level childcare
facilities and 31 levels of office accommodation with four differing floor plates ranging
from circa 580m² to 750m² and expansive CBD and harbour views from the upper
levels. Parking provided for 79 vehicles.
NABERS Rating
Energy:
Land Area
1,824m2
NLA
Office
Retail
Total
Parking
79 spaces
Vacancy
19.6% of NLA (albeit vendor providing $4.2 million in income support)
No of Tenants
31 tenants
Net Passing Income
$11,431,791 (before income support)
3.5 Stars
20,055m²
844m²
20,899m2
Inputs
Analysis
Market Rentals
Office: $ 630 - $1,075/m² gross ($770/m² gross avg)
Passing Initial Yield
6.8%
Avg Cmpd Mkt Growth
3.9% (5 year) 4.1% (10 year)
Core Market Yield*
7.6%
Outgoings
$159/m² pa
IRR (after costs)
8.6 % (5yr) 9.3% (10yr)
Terminal Yield
7.75%
Passing v Market Rent Relativity
106.9%
Capitalisation
Adjustment period
24 months
Rate/m² NLA
$8,254/m²
Leasing Allowance
Downtime - 6-9 months.
Weighted Average Lease Expiry (Yrs)
Income
Area
Incentives – 17.5% to 27.5%
Capital Expenditure
2.5 years**
2.4 years**
Ongoing - $30/m² pa
Immediate - $3,000,000
NPV (10 yrs) - $9.5 million
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property
specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
** Calculated before income support payments. Reflects circa 3 years after income support.
Comments
Well presented, A-grade asset positioned within the CBD core and providing a multi tenanted income profile comprising a mixture of whole floor and part floor tenancies
primarily on gross or semi-gross leases. The building has a staggered expiry profile with a WALE of 2.4 years albeit increasing to circa 3 years, subject to income support
payments by the vendor of $4.2 million. As advised the property was purchased for a headline price of $172,500,000 however our calculations account for the payment of
all outstanding incentives by the vendor (circa $5.6 million) plus the provision by the vendor of $4.2 million in income support.
The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained within
may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.
Sales Analysis
Sales Analysis
9 Hunter Street, Sydney, NSW
Sale Date
December 2012
Sale Price
$72,259,092 (GST Exclusive)
Vendor
Colonial First State (DPIF and Commonwealth Bank Officers Superannuation Corp)
Purchaser
Corval Partners
Description
Progressively refurbished circa 1983 B-grade commercial office building (Stratum Titled)
comprising ground level foyer and café, office accommodation over Levels 3-19 and
rooftop plant area.
NABERS Rating
Energy:
3.5 star
Water:
4.0 star
NLA
15,623m²
Parking
Nil
Vacancy
9.4% of NLA
No of Tenants
1 retail tenant (café)
17 office tenants
Net Passing Income
$6,554,789
Inputs
Analysis
Market Rentals
Office:
$570-$650/m² gross (avg $606/m² gross)
9.07%
Retail:
$400/m² gross (foyer cafe)
4.0% pa (10 yrs); 3.8% (5 yrs)
Avg Cmpd Mkt Growth
Core Market Yield*
8.76%
Outgoings
$160/m²
IRR (after costs)
9.44%
Terminal Yield
9.0%
105.1%
Leasing Allowance
6-12 months and 17.5%-25% incentive over 10 year
horizon (avg 20.5%) with retention factors applied.
Rate/m² NLA
$4,625/m²
Capital Expenditure
$30/m² per annum and $200/m² at each expiry at 50%
retention.
Income
Area
4.0 years
3.6 years
Tenant Composition by Passing Income
Vacant
0%
Subdivided
Tenancies
27%
Diamond
Conway
8%
100%
Whole Floor
Tenancies
35%
% of Net Lettable Area
Macquarie Group
30%
Lease Expiry Schedule
80%
60%
40%
20%
0%
Current
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
The property comprises a progressively refurbished Stratum Titled B-grade asset which has a tenancy profile comprising 17 commercial tenants, 1 retail tenant and with
9.4% vacancy at the date of sale. Macquarie Bank Group (28% of NLA) forms the major building tenancy with a lease expiry in December 2017. Located within an infill
position within the Core Precinct of the Sydney CBD in close proximity to Wynyard Station. The WALE is relatively short term, however, reasonably typical for an asset with
a smaller, multi-tenant profile. The property was sold after a full marketing campaign. Purchase Price reflects outstanding incentives (not paid out by vendor) of circa $6.1
million whilst income support of circa $1.25 million has been provided by the vendor over vacant areas (9.4% of NLA).
Sales Analysis
Sales Analysis
10 Barrack Street, Sydney, NSW
Sale Date
December 2012
Sale Price
$61,428,104 (GST Exclusive) – advised adjusted price at settlement
Vendor
Blackrock
Purchaser
Bright Ruby
Description
Circa 1980 upper B-grade commercial office building (foyer refurbishment undertaken
recently) comprising basement parking, ground floor foyer and retail, mezzanine office
area and 12 upper office levels. The building enjoys a prominent corner position
overlooking Wynyard Park and Barrack Street plaza and positioned at the western end
of Martin Place.
NABERS Rating
Energy:
Land Area
1,040m²
NLA
9,540.7m²
Parking
15 spaces
Vacancy
0% of NLA
No of Tenants
3 retail tenants
3.0 star
12 office tenants
Net Passing Income
$4,509,742
Inputs
Analysis
7.3%
Core Market Yield*
7.7%
Market Rentals
Office:
Retail:
gross)
$1,500-$1,900/m² gross (avg $1,750/m²
Avg Cmpd Mkt Growth
Office
4.1% pa (10 yrs); 4.0% (5 yrs)
Outgoings
$135/m²
IRR (after costs)
8.9%
Terminal Yield
7.75%
99.4%
Leasing Allowance
6-9 months and 15%-25% incentive over 10 year
Rate/m² NLA
$6,551/m²
Capital Expenditure
retention.
Income
Area
3.1 years
3.1 years
Weighted Average Term to Reversion
Income
2.1 years
16%
24%
8%
7%
4%
6%
10%
8%
9%
8%
Retail tenants
Credit Corp
Part floor tenants
Pigott Stinson
CPA Software
United Airlines
Mitchell & Partners
Bank of QLD
Patria
Northern Capital
Telco
Comments
The property comprises a lower A-grade asset which has a tenancy profile comprising 12 commercial tenants and 3 retail tenants and fully leased at the date of sale.
Located in a prominent corner position overlooking Wynyard Park and at the western most end of the Martin Place spine. Overall provides good quality office
accommodation primarily leased on a whole floor basis. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The
property was sold after a full marketing campaign. The property was sold after a full marketing campaign and we are advised the above price reflects a negotiated headline
figure less the Present Value (PV) of outstanding incentives at settlement.
Sales Analysis
Sales Analysis
107 Pitt Street, Sydney, NSW
Sale Date
December 2012
Sale Price
$22,936,075 (GST Exclusive) – advised adjusted price at settlement
Vendor
Blackrock
Purchaser
IOOF
Description
A 9 level boutique office building originally constructed circa 1960 and comprehensively
retro-fit in late 2002. Comprises basement car parking (7 spaces), ground and
mezzanine level retail (Jamie’s Italian Restaurant) and eight upper levels of office
space.
NABERS Rating
Energy:
Land Area
499.5m²
NLA
3,171.8m² (retail 13.2% of NLA)
Parking
7 spaces
Vacancy
0.0% of NLA
No of Tenants
1 retail tenant
3.5 star
7 office tenants
Net Passing Income
$1,830,036
Inputs
Analysis
Market Rentals
Office:
7.2%
Retail:
$870/m² gross (avg $870/m² gross)
4.0% pa (10 yrs); 3.7% (5 yrs)
Avg Cmpd Mkt Growth
Core Market Yield*
7.4%
Outgoings
$165/m²
IRR (after costs)
9.2%
Terminal Yield
7.50%
94.0%
Leasing Allowance
Rate/m² NLA
$7,231/m²
Capital Expenditure
$25/m² per annum and $150/m² at each expiry at
50% retention
Income
Area
3.5 years
3.3 years
Gallagher Jeff's P/L
11%
100%
IPA Personnel P/L
11%
90%
80%
Next Step
Recruitment
11%
70%
Italian 1 P/L
18%
60%
50%
40%
30%
20%
NAB
10%
Staite Henningsen
12%
Radar Group
17%
10%
0%
Current
Turner International
10%
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
The property comprises a well presented boutique office building located within an infill position within the Core Precinct of the Sydney CBD in close proximity to Martin
Place and Wynyard Railway Station. Jamie’s Italian restaurant occupies the Ground and Mezzanine level under a lease expiring January 2021 whilst the major office
tenant, The Radar Group occupies interconnected Levels 7 and 8 under a lease expiring July 2015. The remainder of office tenants occupy a single Level each with varying
expiry profiles. The WALE is 3.5 years relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full
marketing campaign and we are advised the above price reflects a negotiated headline figure less the Present Value (PV) of outstanding incentives at settlement.
Sales Analysis
Sales Analysis
Grosvenor Place, 225 George Street, Sydney
Sale Date
December 2012
Sale Price
$271,250,000 (25% interest) - $1,085,000,000 (100% equivalent interest)
Vendor
Direct Property Investment Fund (CFSGAM)
Purchaser
Dexus Property Group
Description
Landmark 44-level Premium Grade office tower with basement parking (554 cars),
completed in mid 1988, together with four refurbished older style heritage buildings
along Grosvenor and George Streets, a semi-circular plaza building on the corner of
Essex and Harrington Streets and an enclosed Solarium Foodcourt.
NABERS Rating
Energy:
Land Area
7,675m² (Leasehold title – 85 years remaining)
Office Tower
78,866.2m²
Exchange Courtyard /Royal Naval House 3,958.5m²
Johnsons Building
1,706.9m²
Plaza Building & Ancillary
747.6m²
Solarium Foodcourt
236.6m²
Total
85,515.8m² (as subdivided)
NLA
4 star
Water:
4 star
Parking
554 single spaces
Vacancy
12.7% of NLA
No of Tenants
23 (office), 7 (retail)
Net Passing Income
$63,011,192 pa (post commencement of the new Deloittes lease in April 13)
Inputs
Analysis
Average Market Rentals
Office:
$950/m² gross (Levels 1-20)
$1,065/m² gross (Levels 21-30)
5.3%
Year 1 Passing Yield
5.8%
6.48%
Avg Cmpd Mkt Growth
4.2% pa 10 year CAGR
Core Market Yield*
Outgoings
$167/m²
IRR (after costs)
8.92%
Terminal Yield
6.50%
97.3%
Leasing Allowance
Varies 6-12 mths @ 60% retention over 10 yrs
Incentives vary 17.5%-27.5% @ 80% applied over 10 yrs
Rate/m² NLA
$12,688/m²
Capital Expenditure
$40/m² pa (inflated); $150/m² at expiries (60% retention)
Income
Area
6.4 years
5.9 years
Passing Income Contribution (by % rental)
Parking
4%
100%
Office
94%
80%
60%
40%
20%
0%
Current
Retail
2%
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
Off market transaction from DPIF (managed by CFSGAM) and reportedly purchased at the December 2012 book value. Grosvenor Place was purchased as part of a larger
portfolio including a second CBD office building and retail arcade and a suburban office building with a reported combined price of $503.7 million. Grosvenor Place is a
landmark, Premium Grade commercial office building with the major tenant being Deloittes who have recently extended their lease term until November 2023. In addition to
current vacancy within the main tower of circa 10,700m² (post the expiry of the Bell Potter and JP Morgan), we note that Ashurst/Blake Dawson (16.1% of NLA) will vacate
at lease expiry in March 2015 and this expiry has been accounted for in our analysis. The passing initial yield is impacted by the current vacancy and below market rents
across several tenancies, whilst the Year 1 Initial Yield reflects the new base rental for Deloittes extension which commences in April 2013.
Sales Analysis
Sales Analysis
6-10 O’Connell Street, Sydney NSW
Sale Date
September 2012
Sale Price
Vendor
Colonial (DPIF)
Purchaser
MPGA and PPS
Description
Circa 1970 B-grade commercial office building (retail and foyer further refurbished in
1988/9 and 2010) comprising two basement parking levels (108 spaces), ground floor
foyer and retail, and 25 office levels. Strata titled asset (2 lots) albeit all strata lots are
held by a single entity.
NABERS Rating
Energy:
4.5 star
Water:
3.5 star
Land Area
1,767m²
NLA
16,315m² (retail 10.3% of NLA)
Parking
108 spaces
Vacancy
3.4% of NLA
No of Tenants
6 retail tenants
37 office tenants
Net Passing Income
$8,368,703
Inputs
Analysis
Market Rentals
Office:
8.0%
Retail:
$450-$1,270/m² gross (avg $587/m² gross)
4.1% pa (10 yrs); 3.7% (5 yrs)
Core Market Yield*
8.4%
Avg Cmpd Mkt Growth
Outgoings
$155/m²
IRR (after costs)
9.4%
Terminal Yield
8.75%
100.1%
Leasing Allowance
Rate/m² NLA
$6,441/m²
Capital Expenditure
$40/m² per annum and $250/m² at each expiry at
50% retention
Income
Area
2.8 years
2.6 years
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
<250/m2tenants
<500/m2tenants
>500/m2tenants
Parking/Telco
Retailtenants
Vacant
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
The property comprises a freestanding upper B-grade strata asset which has a relatively management intensive tenancy profile, although has demonstrated good tenant
retention over the years. Located within an infill position within the Core Precinct of the Sydney CBD in close proximity to 1 Bligh Street and 1 O’Connell Street, both being
prominent assets. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold after a full
marketing campaign. Secure Parking operate the 108 basement car spaces under a management agreement expiring December 2014.
Sales Analysis
Sales Analysis
50 Carrington Street, Sydney, NSW
Sale Date
August 2012
Sale Price
Vendor
REST
Purchaser
Dexus
Description
Circa 1992 B-grade commercial office building (ground level façade and foyer
refurbished in 2008) comprising basement parking levels (20 spaces), ground floor foyer
and retail and 14 office levels.
NABERS Rating
Energy:
Land Area
980m²
NLA
11,261m² (retail 3.3% of NLA)
Parking
20 spaces
Vacancy
25.1% of NLA
No of Tenants
2 retail tenants
3.0 star
10 office tenants
Net Passing Income
$3,814,513
Inputs
Analysis
Market Rentals
Office:
6.5%
Retail:
$720-$1,230/m² gross (avg $905/m² gross)
4.0% pa (10 yrs); 3.8% (5 yrs)
Core Market Yield*
8.2%
Avg Cmpd Mkt Growth
Outgoings
$149/m²
IRR (after costs)
9.4%
Terminal Yield
8.25%
96.9%
Leasing Allowance
Rate/m² NLA
$5,195/m²
Capital Expenditure
retention. Additional capex applied for general refurb
allowances to vacant areas.
Income
Area
2.4 years
2.3 years
100%
80%
60%
40%
20%
0%
Retail tenants
SPBF
TPD Nominees
Kann Finch
REST
Aust Comp Society
Taiwan Co-op
Aust Direct Mkting
WHAM Pty
Vacant
O'Connell Leasing
Telcos
Current
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
The property comprises an upper B-grade asset which has a tenancy profile comprising 10 commercial tenants and 2 retail tenants with 25% vacancy at the date of sale (3
whole floors and one commercial suite) albeit good tenant retention has been demonstrated over the years. Located within an infill position within the Core Precinct of the
Sydney CBD opposite Wynyard Park. The WALE is relatively short term, however, reasonably typical for an asset with a smaller, multi-tenant profile. The property was sold
after a full marketing campaign. Purchase Price reflects outstanding incentives (not paid out by vendor) of circa $1.6 million.
Sales Analysis
Sales Analysis
60 Clarence Street, Sydney, NSW
Sale Date
July 2012
Sale Price
$14,250,000
Vendor
Harbour & Co
Purchaser
Private investor
Description
An eight-level boutique (part heritage) office building located within the Western Corridor
of the Sydney CBD, being a consolidation of 60 & 62 Clarence Street. The buildings
were substantially refurbished in 2009 to provide consolidated floorplates, an additional
two commercial levels, a new façade to the western elevation (60 Clarence Street) and
the retention of the heritage façade (62 Clarence Street – John Sands Building circa
1910). The property comprises a single ground level retail tenancy, seven upper
commercial levels.
NABERS Rating
N/A
Land Area
372.2m²
NLA
1,846m²
Parking
Nil
Vacancy
Nil – fully leased
No of Tenants
Retail:
1 tenant
Commercial
6 tenants
Inputs
Analysis
Market Rentals
Office:
$600/m² - $660/m² pa gross
6.7%
Retail:
$900/m² - pa gross
Fully Leased Initial Yield
6.8%
Avg Cmpd Mkt Growth
4.0% pa gross (10 year) @ 19% avg incentive
3.7% pa gross (5 year)
Core Market Yield**
6.8%
Outgoings
$122/m² pa
IRR (after costs)
7.9%
Terminal Yield
7.0%
99.8%
Leasing Allowance
6-9 months downtime 17.5%-25% incentives over 10
year horizon @ 50% retention.
Rate/m² NLA
$7,719/m²
Capital Expenditure
$20/m² pa ongoing and $150/m² make good at lease
expiry.
Income
Area
4.7 years
4.6 years
**Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property
Use Composition by Lettable Area
Office
90%
Retail
10%
100%
80%
60%
40%
20%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
An eight-level boutique (part heritage) office building located within the Western Corridor of the Sydney CBD, being a consolidation of 60 & 62 Clarence Street comprising a
single ground level retail tenancy, seven upper commercial levels with the property sold on a fully leased basis with all outstanding incentives paid out by the vendor.
Included within the sale price was 734m² of transferable Heritage Floor Space (HFS) rights granted by City of Sydney Council as part of the approval process (substantial
refurbishment in 2010) with an assessed value of circa $265,000.
Sales Analysis
Sales Analysis
48 Martin Place, Sydney, NSW
Sale Date
March 2012
Sale Price
$134,000,000 (advised apportionment of total price of $150m with 9-19 Elizabeth St)
Vendor
Commonwealth Bank of Australia (CBA)
Purchaser
Macquarie
Description
Historic circa 1928 heritage listed office building comprising basement, ground floor
retail banking chamber, mezzanine level and nine upper levels of office
accommodation.
NABERS Rating
Not rated
Land Area
2,719m²
NLA
18,899.8m² - Às Is’
21,443.0m² - `subject to existing DA’
Parking
Basement parking for 15 cars.
Vacancy
83.6% of NLA
No of Tenants
Retail:
1 (10yr leaseback to CBA of basement/ground bank chamber)
Commercial:
Nil
Inputs
Analysis
Market Rentals
Office:
$840/m² pa gross (avg)
-0.5%
Retail:
$450/m² - $1,250/m² pa gross
Fully Leased Initial Yield (Post Refurb)
7.4%
Avg Cmpd Mkt Growth
Core Market Yield**
6.0%
Outgoings
$160/m² pa
IRR (after costs)
N/A
Terminal Yield
N/A
N/A
Leasing Allowance
24 months downtime and 25% incentive for utilised for
post refurbishment office space.
Rate/m² NLA
$7,090/m²
Capital Expenditure
Circa $70 million refurbishment/extension budgeted.
N/A
Office
84%
Retail
16%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
Circa 1928 heritage listed asset being well located in the City Core of the CBD purchased by the Macquarie Group for owner occupation (office component) in conjunction
with adjoining 9-19 Elizabeth Street. The purchase price of $134 million noted above represents the advised price apportioned to this asset as part of the total purchase
price of $150 million reported for the two assets. Sold subject to a 10 year leaseback (4 x 5 year options) to CBA over the basement and ground level banking chamber,
and vacant possession of the office component. Sold with Development Approval permitting substantial refurbishment of existing improvements (inc rooftop addition) and
the awarding of 9,986m² of transferrable Heritage Floor Space. We are advised Macquarie intend owner occupy both this property and adjoining 9-19 Elizabeth Street and
whilst our assessment considers 48 Martin Place as a `stand alone’ investment, the nature of the consolidated purchase should be noted when considering the metrics
demonstrated by this sale. Given the owner occupied nature of the purchase, the fully leased initial yield is considered to better demonstrate the true market return for an
asset of this nature.
Sales Analysis
Sales Analysis
149 Castlereagh Street, Sydney, NSW
Sale Date
March 2012
Sale Price
$40,600,000
Vendor
Ernst & Young (appointed receivers)
Purchaser
Blackstone (Acorn II Subtrusco 1 Pty Limited)
Description
A 13-level office tower originally constructed circa 1935 being extended and fully
retrofitted in 2009 to comprising, lower ground, ground and part 1st level retail, ground
floor foyer, 11 upper levels of office accommodation and 1 plant level. The property is
located within the Midtown precinct of the CBD and was sold substantially with vacant
possession.
NABERS Rating
Not yet rated (due to vacant possession status)
Land Area
1,325m²
NLA
2,327.5m² - retail
10,728.5m² - commercial
13,056.0m²
Parking
Nil
Vacancy
Sold substantially with vacant possession.
Inputs
Analysis
Market Rentals
Office:
$500/m² - $620/m² pa gross
N/A
Retail:
$550/m² - $1,500/m² pa gross
10.4%
Avg Cmpd Mkt Growth
N/A
Core Market Yield**
N/A
Outgoings
$140/m² pa (est.)
IRR (after costs)
N/A
Terminal Yield
N/A
N/A
Leasing Allowance
18 months average downtime is considered reasonable
to lease the largely vacant asset at market incentives of
circa 25% to 27.5%.
Rate/m² NLA
$3,110/m²
Capital Expenditure
N/A – DCF not utilised in this instance
(after allowance for income support)
Income
Area
N/A
N/A
Retail
18%
100%
Office
82%
80%
60%
40%
20%
0%
Current
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
Fully retro-fitted and extended (circa 2009) commercial asset located in the Midtown precinct of the CBD sold via an Expressions of Interest campaign (under instructions
from receiver managers Ernst & Young) largely with vacant possession. Reported refurbishment cost of circa $30 million with the commercial floor plates varying in size
from circa 995m² to 1,125m² providing non column free slightly irregular shaped accommodation with central services core. The retail component is located over part
basement, ground and first floor whilst no on-site parking is available. Given the substantially vacant nature of the asset, the fully leased initial yield is considered to better
demonstrate the true market return for the asset, representing an appropriate margin over more traditional leased investment stock and further reflected in the improved
rate of $3,110/m² of NLA. Our market rentals reflect the market Às Is’ albeit we recognise that due to the proximity of the 161 Castlereagh Street development the asset
has the potential to benefit from short term market rental upside.
Sales Analysis
Sales Analysis
9-19 Elizabeth Street, Sydney, NSW
Sale Date
March 2012
Sale Price
$16,000,000 (advised apportionment of total price of $150m with 48 Martin Place)
Vendor
Commonwealth Bank of Australia (CBA)
Purchaser
Macquarie
Description
A circa 1967 C-grade commercial office building consisting of basement level plant
rooms and storage areas, ground level entry foyer, ground level retail, and 11 upper
office levels with rooftop terrace and plant room.
NABERS Rating
Not rated
Land Area
474.2m²
NLA
4,466.7m²
Parking
No on-site parking is provided.
Vacancy
100% of NLA
No of Tenants
Retail:
Nil
Commercial:
Nil
Inputs
Analysis
Market Rentals
Office:
$530/m² pa gross (avg)
N/A
Retail:
$650/m² pa gross
8.5%
Avg Cmpd Mkt Growth
Core Market Yield**
8.5%
Outgoings
$130/m² pa
IRR (after costs)
9.1%
Terminal Yield
8.75%
N/A
Leasing Allowance
6-9 months downtime 17.5%-25% incentives over 10
Rate/m² NLA
$3,582/m²
Capital Expenditure
expiry. $700/m² Yr 1 refurbishment allowance.
Income
Area
0.0years
0.0 years
Retail
6%
100%
80%
Area
% of Net Lettable
Office
94%
60%
40%
20%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
C-grade asset being well located in the City Core of the CBD towards purchased with vacant possession by the Macquarie Group in conjunction with adjoining 48 Martin
Place. The purchase price of $16 million noted above represents the advised price apportioned to this asset as part of the total purchase price of $150 million reported for
the two assets. Our calculations reflect the vacant possession status of the asset with 9 month leasing allowance, full 25% incentive (on a notional 4 year lease) and
general plant/base building refurbishment costs of $700/m² of NLA. We are advised Macquarie intend owner occupy both this property and adjoining 48 Martin Place and
whilst our assessment considers 9-19 Elizabeth Street as a `stand alone’ investment, the nature of the consolidated purchase should be noted when considering the
metrics demonstrated by this sale.
Sales Analysis
Sales Analysis
Deutsche Bank Place, 126 Phillip Street, Sydney
Sale Date
March 2012 (internal transfer)
Sale Price
$176,250,000 (approx. 25% interest) - $705,000,000 (100% equivalent interest)
Vendor
Investa Property Group
Purchaser
Investa Commercial Property Fund (ICPF) / Investa Office Fund (IOF)
Description
A 37 level Premium-grade office tower constructed in 2005 and comprising four ground
floor retail tenancies, 31 upper office levels and three rooftop plant levels. A podium
provided to the southern alignment of the site comprises a 4 level building which houses
staff amenities and change rooms, building management, 3 retail tenancies and a child
care centre. Positioned within the Core/Financial Hill precinct and is an award winning
building designed by Norman Foster.
NABERS Rating
Energy:
Land Area
3,936 m²
NLA
Retail:
4.5 star
Water:
3.5 star
466.7m²
Pavillion Child Care Centre:
262.9m²
Offices:
41,526.1m²
Total
42,255.7m²
Parking
78 single spaces
Vacancy
0.0% of NLA and 3 car spaces vacant.
No of Tenants
16 (office), 4 (retail), 1 (childcare)
Net Passing Income
$43,473,824 pa
Inputs
Analysis
Market Rentals
Office:
$970/m² gross (Levels 1-13)
6.16%
Year 1 Passing Yield
6.26%
Avg Cmpd Mkt Growth
4.2% pa 10 year CAGR
Core Market Yield*
6.35%
Outgoings
$179/m²
IRR (after costs)
8.75%
Terminal Yield
6.375%
95%
Leasing Allowance
Varies 6-12 mths @ 60% retention over 10 yrs
Incentives vary 15%-22.5% @ 75% applied over 10 yrs
Rate/m² NLA
$16,684/m²
Capital Expenditure
$25/m² pa (inflated); $250/m² at expiries (60% retention)
Income
Area
4.8 years
4.8 years
100%
90%
Office
94.6%
Parking
2.3%
Other
1.9%
80%
70%
60%
50%
40%
30%
20%
10%
Retail
1.1%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
Related party transaction of asset after pre-emptive rights exercised by ICPF and IOF. Premium Grade commercial office building completed 2005 within the “financial hill”
precinct of the Sydney CBD with a quality tenancy profile with 0.0% vacancy, low sub-lease occupancy, favourable 1-3 year expiry profile and WALE of 4.8 years. The
tenancy profile is dominated by Deutsche (33.1% of NLA; expiry October 2015) and Allens Arthur Robinson (31.6% of NLA; expiry June 19). The initial and running yield is
impacted by the below market rents (partial effective rents) and deferred reversions over parts of the Deutsche and AAR tenancies.
Sales Analysis
Sales Analysis
333 Kent Street, Sydney, NSW
Sale Date
February 2012
Sale Price
$47,750,000
Vendor
AMB Property Pty Limited
Purchaser
Maville Group Australia Pty Limited
Description
9 level B-grade commercial office building completed circa 1985 with heritage masonry
façade to the lower four levels at the Kent Street frontage.
NABERS Rating
Nil (exemption due to current educational use).
Site Area
1,518m²
NLA
Retail
254.5m²
Office
8,683.5m²
Total
8,938.0m²
Parking
41 spaces
Vacancy
0.0% vacant (by NLA)
No of Tenants
1
Major Tenants
Central Queensland University (100% NLA)
Net Passing Income
$3,927,659 p.a. net
$4,128,383 p.a. net at settlement (fixed 4% increase between exchange & settlement)
Inputs
Analysis
Market Rentals
Office:
$540/m² p.a. gross (average)
Retail:
$540/m² p.a. gross (average)
8.2%
8.56% (at settlement)
Core Market Yield*
8.4%*
Avge. Compound Market
Rental Growth
4.0% p.a. (10 years)
10 Year IRR (after costs)
9.3%
3.7% p.a. (5 years)
Rate/m² NLA
$5,342/m²
Outgoings
$122/m² p.a.
98.0%
Terminal Yield
8.5%
Income
5.2 years
Leasing Allowance
6-9 months over 10 year horizon and incentives
averaging 18.2% over the 10 yr horizon.
Area
5.2 years
Capital Expenditure
$35/m² per annum sinking fund and capital expenditure
of $275/m² at Yr 6 lease expiry.
Central Qld University
100%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
B-grade building located in the Western corridor of the Sydney CBD sold fully leased to Central Queensland University (CQU) until April 2017 with sub-leases in place over
the majority of floors. The property was purchased òff market’ by a private off-shore Chinese investor. Previously sold in August 2010 for $41.5 million, with the 14.5%
increase demonstrated by the current purchase being primarily attributable to the removal of a Break Clause able to be exercised by the tenant on or prior to April 2012 and
interim fixed rental reviews. Fixed 4% increase scheduled at 1 May 2012 falls before settlement resulting in a post settlement initial yield of 8.56%. Remaining reviews
under the existing lease comprise fixed annual 4% increases and a face market review (minimum 4% increase and maximum 10% increase) in 2014. The property is
considered to have longer term re-development potential with the current FSR being in the order of 6.5:1.
Sales Analysis
Sales Analysis
Wharf 10, 56 Pirrama Rd, Pyrmont, NSW
94 Year Leasehold Interest
Sale Date
April 2012
Sale Price
$31,800,000
Vendor
Charter Hall Holdings Limited
Purchaser
Abacus
Description
A low rise commercial office building constructed on a redeveloped finger wharf over
Pyrmont Bay, known as ‘Wharf 10’. The building was constructed circa 2001 and
provides low rise, A-grade accommodation over ground level, 2 upper levels and a small
mezzanine level. 40 car spaces are provided within a single basement level in addition
to various storage units.
Land Area
5,764m2 (leasehold)
NLA
4,346.9m²
NABERS Rating
2.5 stars
Parking
40 car spaces ( 1 space per 109m2 of NLA)
Vacancy
0.0%
No of Tenants
4 office tenants
Net Passing Income
$2,739,596
Inputs
Analysis
Avg Cmpd Mkt Growth
Outgoings
Office:
$680/m² gross (avg)
$400 per car space per month ($4,800pspa)
8.6%
Core Market Yield*
8.7%
$499,894 ($115/m )
IRR (after costs)
9.6%
100%
2
Terminal Yield
9.0%
Leasing Allowance
6-9 months downtime 17.5%-22.5% incentives over 10
Rate/m² NLA
$7,316/m²
Capital Expenditure
expiry (50% retention).
Income
Area
6.2 years
6.3 years
Hapag Lloyd
36%
Other
1%
Axciom P/L
35%
Activision Blizzard
16%
100%
80%
60%
40%
20%
0%
Current
Mood Media
12%
Vacant
Yr 2
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
Low rise commercial office accommodation constructed circa 2001 and provides A-grade accommodation over ground level, 2 upper levels and a small
mezzanine level. Sold fully leased to 4 tenants, the major of which being Hapag Lloyd (36% of NLA) and Axciom Pty Limited (35% of NLA) with lease expiries of
July 2017 and April 2019 respectively, and fixed 4% annual increases for both tenants. All outstanding incentives were reportedly paid out by the vendor.
Leasehold interest (expiring July 2106) with annual peppercorn rent payable.
Sales Analysis
Sales Analysis
Bond Store 3 - 30 Windmill Street, Walsh Bay NSW
Sale Date
February 2012
Sale Price
$17,000,000
Vendor
PPB Advisory (as Receivers & Managers)
Purchaser
Private Investor
Description
A 4 level boutique office building comprising a refurbished heritage wool bond store
building with parking for 18 vehicles. The building provides refurbished, boutique office
accommodation incorporating numerous period features being fully let to major
advertising firm Publicis Mojo. Located in the Walsh Bay Precinct and in close proximity
to the Barangaroo redevelopment area, subject to a 99 year ground lease.
NABERS Rating
N/A - exempt
Land Area
1,441m2
NLA
3,652.5m2
Parking
18 spaces (9 stacked)
Vacancy
Nil – fully leased to Publicis Mojo
No of Tenants
1 tenant
Net Passing Income
$1,824,956
Inputs
Analysis
Market Rentals
2
Office:
$550/m gross pa
10.7%
Retail:
N/A
Core Market Yield*
9.0%
Avg Cmpd Mkt Growth
3.8% (10 years)
IRR (after costs)
10.0%
Outgoings
$273,919 ($75/m2)
100%
Terminal Yield
9.25%
Rate/m² NLA
$4,655/m²
Leasing Allowance
6-12 months downtime 17.5%-25.0% incentives over 10
Income
Area
Capital Expenditure
$40/m² p.a. ongoing and $250/m² make-good at lease
expiry (16% of value).
1.7 years
1.7 years
Office
96%
Parking
4%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
Well presented, heritage office building (albeit leasehold), providing boutique office accommodation and typical floor plates of circa 1,140m2 with onsite parking. The
building is fully occupied by Publicis Mojo with a lease expiry of October 2013 however a further 5 year option remains. The property was sold under receivership conditions
with the purchase price reflecting an attractive initial yield. The resultant core market yield accounts for forecast short term capital expenditure requirements and the
potential whole building expiry in 2013, albeit at 50% tenant retention, and accordingly represents a risk adjusted yield. We understand that negotiations have commenced
with the sitting tenant regarding lease renewal, albeit as at the date of sale the option period had not been exercised.
Sales Analysis
Sales Analysis
140 Arthur Street, North Sydney, NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
December 2012
AMP Capital Investors Limited
CorVal Partners on behalf of 3rd Party Investment Mandate.
A circa 1973 completed, multi-level B-grade commercial building comprising 3
levels of basement parking (84 spaces), a ground floor café and commercial
tenancy, 13 upper levels of office accommodation and roof-top plant rooms. The
building has undergone some refurbishment since 2007 including refurbishment of
the foyer, most common lobby areas and some amenities. We understand the last
major refurbishment (including the façade & lifts) was undertaken in 1996.
Energy:
3.5 Star
Water:
4.5 Star
1,119m2
8,374.1m2
84 cars reflecting 1 space/100m2 of NLA
3.2% (NLA)
16 (major tenant NSW Business Chamber – 49.5% of NLA)
$3,941,604pa (before rebates)
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
Inputs
Analysis
$390/m2 to $460/m2 net
$500pcm (single) & $400pcm (tandem)
Market Rentals
Office:
Parking
Equated (fully leased) Initial Yield
Avg Cmpd Mkt Growth
3.7% (10 years)
Core Market Yield*
9.4%
Outgoings
$119.26/m2
IRR (after costs)
9.5%
Terminal Yield
9.5%
100.0%
Leasing Allowance
We have allowed 12 months for current vacancies and
between 6 and 18 months for future expiries. Incentives
range from 20% to 25% (gross) of the lease term.
Rate/m² NLA
$4,669/m²
Capital Expenditure
An ongoing allowance of $25/m2 pa, linked to tenant
retention, plus $200/m2 at each lease expiry. We have
allowed $500/m2 in Year 6 for upgrading the NSW Business
Chamber tenancy area.
Income
3.4 years
Area
3.4 years
Adopted $120/m2
10.1%
9.4%
Expiry Profile - by NLA
100%
49%
90%
0.8%
7%
80%
70%
60%
50%
40%
30%
20%
10%
43%
0%
Active International
Blue Chair Café
NSW Business Chamber
Vacant
Sub 500m² tenants
Current
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Future Expiries
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Comments
x
x
x
x
x
x
The subject sold after an Expressions of Interest marketing campaign which closed 6 September 2012.
We understand that the purchaser takes on the outstanding incentives which are advised to be in the order of $750,000 and are a mixture of capital
contribution and rental rebates.
The purchaser also takes on the leasing risk of current vacancies.
It is understood the purchaser had provisioned for approximately $1.5 mil for capital expenditure over the first 3 years. We have made a similar allowance
within our calculations. Total capex over the 10 year horizon is approx. $6.6 million, while the NPV of the capex is approx. $4.8 million.
The major tenant in the building is the NSW Business Chamber with 4,146m2 or 49.5% of the NLA. Their lease expiry is 31 January 2018. They do not
have a make good obligation. We have accounted for this within our calculations.
The property sold previously in December 2005 for $44,687,500.
Sales Analysis
Sales Analysis
54 Miller Street, North Sydney, NSW
Sale Date
October 2012
Sale Price
Vendor
Investa Nominees P/L
Purchaser
Australian Development Corporation Group
Description
A multi-level commercial building comprising 5 split levels of basement parking, 2
ground floor retail tenancies, plus foyer and lift lobby, together with 13 upper
levels of office accommodation and roof-top plant rooms.
NABERS Rating
Energy:
4.0 Star
Water:
3.5 Star
Land Area
1,011.8m2
NLA
7,056.7m2
Parking
Vacancy
13.2%
No of Tenants
18
Net Passing Income
$2,113,146pa (Including rebates)
$2,432,779pa (Excluding rebates)
Inputs
Analysis
Market Rentals
Office:
$340/m2 to $410/m2 net
8.7%
Parking
$450/space/mth & $500/space/mth
10.7%
Avg Cmpd Mkt Growth
3.7% (10 years)
Core Market Yield*
11.1%
Outgoings
$120.78/m2
IRR (after costs)
9.4%
Terminal Yield
11.0%
96.6%
Leasing Allowance
We have allowed 12 months for current vacancies and
between 6 and 18 months for future expiries. Incentives
range from 20% to 30% (gross) of the lease term.
Rate/m² NLA
$3,429/m²
Capital Expenditure
An ongoing allowance of $25/m2 pa, linked to tenant
retention, plus $150/m2 at each lease expiry.
Income
1.8 years
Area
1.7 years
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific
issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
35%
8%
7%
3%
2%
2%
35%
8%
0%
Kwik Kopy
Café Niche
Whole Floor
0m2 to 200m2
201m2 to 400m2
Multiple floor
Vacant
Parking
Wilson
Comments
x
x
x
x
x
x
The subject sold after an Expressions of Interest marketing campaign which closed 16 August 2012.
The purchase price of $24.2 million reflects that fact that the purchaser takes on outstanding incentives to Nationwide News, SN Pacific, Patni
Computers, Oxygen IT, Payam Data Recovery, Pike Abrahams Brailey, Hones LaHood, Stewart Title, NEXTDC, Keystone Management, Chick St Clair
and White Ribbon.
The purchaser also takes on the leasing risk of current vacancies.
It is understood the vendor had provision for substantial capital expenditure (façade, boiler etc) over the short to medium term. However the purchasers
intentions are unknown and accordingly, we have adopted an ongoing capital expenditure allowance (see above) and a make good allowance. Total
capex over the 10 year horizon is approx. $3.25 million, while the NPV of the capex is approx. $2.1 million.
The major tenant in the building is UGL with 1,611m2 or 23% of the NLA, followed by Inchcape with 765m2 or 11% of the NLA.
The property sold previously in February 2007 for $33,715,000.
Sales Analysis
Sales Analysis
“NCR House”, 8-20 Napier St, North Sydney, NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
July 2011
$57,300,000
Charter Hall Office REIT
Australian Catholic University
A good quality B grade 23 level commercial building comprising 3 levels of
basement parking, ground floor foyer & lift lobby, plus small commercial
suite, with 19 upper levels of office accommodation, together with Level 23
(vacant/potential storage) and roof-top plant rooms.
Energy: 3.0 Star
Water:
3.0 Star
2
1,503m
2
10,607.3m
2
124 spaces reflecting 1 space/86m (a high percentage of tandem spaces)
0% (see comment section)
12
$5,302,911pa
Inputs
Analysis
Market Rentals
Av Cmpd Mkt Growth
2
2
Office:
$390/m to $480/m net
9.3%
Parking:
$450pcm–tandem & $550pcm–single.
Core Market Yield*
8.7%
IRR (after costs)
9.0%
4.0%
2
Outgoings
$1,070,846, reflecting $100.95/m of NLA
101.0%
Terminal Yield
9.0%
Rate/m² NLA
$5,402/m²
Leasing Allowance
Between 6 & 18 months, depending on the level
of expiry in the relevant lease year.
Weighted Average Lease Expiry
(Yrs)
Income
Area
Capital Expenditure
$1,224,000 in the 1 4 years, $20/m pa
ongoing, linked to CPI (commencing in Year 5),
2
plus $150/m at each lease expiry (linked to
tenant retention).
st
3.9 years
4.0 years
2
Teradata
9.2%
ACU
27.8%
Multi Secure
0.8%
IDG Communications
11.3%
NRS Media
3.2%
Customw are
3.7%
IDC
2.8%
VMWare
11.2%
Stora Enso
2.8%
100%
NCR Australia
21.9%
80%
60%
40%
20%
0%
Current Yr 2
Yr 4
Yr 6
Yr 8
Yr 10
(Confidential)
4.0%
Vacant
Future Expiries
Comments
x
x
x
The property was purchased off-market by a partial owner occupier, looking to take more space within the building as it becomes available.
The asset is situated on the north western fringe of North Sydney CBD close by the ACU main North Sydney campus.
Our analysis is based and conditional upon three confidential leasing agreements HOA to ACU and others, proceeding to lease execution
on the terms and conditions adopted.
Sales Analysis
Sales Analysis
182 Blues Point Rd, McMahons Point, NSW
Sale Date
November 2012
Sale Price
Vendor
EFM P/L
Purchaser
Centennial Property Group
Description
A multi-level commercial building comprising three retail and two office tenancies on the
ground floor, four office tenancies on Level 1, 27 car spaces on Level 2 and six upper
levels of office accommodation, plus roof-top plant rooms.
NABERS Rating
Energy:
2.5 Star
Water:
1.5 Star
Land Area
1,176.2m2
NLA
4,295.6m2
Parking
27 spaces reflecting 1 space/159m²
Vacancy
18.6% (Level 1 plus 2 car spaces)
No of Tenants
10
Net Passing Income
$1,889,584pa
$210,000 in income support was provided by the vendor.
Inputs
Analysis
Market Rentals
2
Office:
$400 to $550/m net
8.25%
Retail:
$550 to $800/m2 net
Core Market Yield*
10.2%
Avg Cmpd Mkt Growth
3.7% (10 year horizon)
IRR (after costs)
10.2%
Outgoings
$105.72/m2
96%
Terminal Yield
10.25%
Rate/m² NLA
$5,331/m²
Leasing Allowance
Current vacancies – 6 months letting up and 25% incentive.
Future expiries – 6 to 12 months at 50% tenant retention and
incentives at 20% to 25% @ 75% probability
Income
Area
Capital Expenditure
Zero is Years 1 & 2, then $20/m² linked to CPI and $150/m² at
each lease expiry linked to tenant retention.
3.1 years
3.1 years
11%
100%
12%
90%
7%
13%
5%
3%
13%
3%
0%
80%
70%
60%
50%
40%
30%
20%
5%
13%
10%
15%
0%
Newsagent
Grocer
Nippon Ent.
Anytime Fitness
Vacant
Self Care Corp
Software AG
Nuplex
Getty Images
IPCA
Seymour White
Other Income
Current
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Yr 6
Yr 7
Future Expiries
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Comments
x
This property is subject to a long term ground lease (Head Lessor – Trustees of the Roman Catholic Church for the Archdiocese of Sydney), expiring 28 June 2106.
The interest transferred in this sale is therefore a leasehold interest.
x
Subsequent to exchange of contracts Level 1 (and 2 car spaces) was leased to “Only About Children” for a 7 year lease term. This transaction increased the
passing initial yield to 9.86% and the core market yield to 10.3%.
x
It is understood the vendor paid out the existing incentives, however having provided the income support ($210,000), the purchaser took on responsibility for the
incentive to Only About Children.
x
Subsequent to purchasing the asset for $26.2 million in June 2007, EFM had spent approximately $8,250,000 on capital expenditure.
x
Following the leasing up of Level 1 this became a fully lease asset.
Sales Analysis
Sales Analysis
162 Blues Point Rd, McMahons Point, NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
Inputs
November 2012
Queensland Local Government Superannuation Board
Kingsmede
An extensively refurbished three storey B-grade office building with
basement parking for 59 cars. Originally constructed in the 1970’s as an
office / warehouse building, it was refurbished for office usage in 1999.
Energy: 3.5 star
Water:
4.5 star
2
2,251m
2
4,056m
2
59 spaces reflecting 1 space/69m
0%
1
$1,580,393pa (including rebate)
$2,004,764pa (excluding rebate)
Analysis
Market Rentals
Office:
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
2
$300 - $400/m net
Parking: $425/space/month
Avg
Cmpd
Growth
Mkt
3.8%
2
Outgoings
$100.92/m
Terminal Yield
8.5%
Leasing Allowance
18 months in Year 6 @ 50% retention.
Capital Expenditure
2
Ongoing allowance of $20/m pa linked to CPI,
2
plus $150/m at lease expiry, linked to tenant
retention.
Passing Initial Yield (incl rebate)
7.9%
Passing Initial Yield (excl rebate)
10.0%
Core Market Yield*
8.4%
IRR (after costs)
8.4%
90%
Rate/m² NLA
$4,931/m²
(Yrs)
Income
Area
6.0 years
6.0 years
Office
79.5%
Parking
20.5%
100%
80%
60%
40%
20%
0%
Current
Yr 2
Yr 4
Yr 6
Vacant
Yr 8
Yr 10
Future Expiries
Comments
x
x
x
x
x
x
x
The subject property was purchased following an Expressions of Interest campaign.
We are advised that the purchaser takes on the outstanding incentive to Diageo. The incentive is in the form of a rental rebate of
$35,364.23/month for the term of the lease. Our analysis acknowledges the outstanding incentive.
The whole of the property is leased to Diageo Australia for 8 years from 1 November 2010 (there is a 4 year option) Reviews are fixed
increases of 3.75%pa and for analysis purposes, we have activated the 1 November 2012 review.
The property has a WALE of 6.0 years at date of sale.
The property previously sold in June 1999 for $16million.
Seemingly a passive investment with the running yield increasing to 9.5% in Year 5.
Although the current zoning precludes high density residential development of the site, it is unknown if the purchasers longer term intentions
are to persue high-density development.
Sales Analysis
Sales Analysis
465 Victoria Avenue, Chatswood NSW
Sale Date
February 2013
Sale Price
Vendor
BNY Trust Company of Australia on behalf of FKP Property Trust.
Purchaser
Hines Global REIT
Description
An A-grade asset completed in 1995 and extensively refurbished in 2012. It comprises a
2 storey retail podium, 15 levels of office accommodation and 3 levels of basement
parking for 220 cars.
NABERS Rating
Designed to achieve a 5 Star NABERS energy rating and 4 Star Green Star rating.
A rating is not yet available for this property.
Land Area
3,198m2
NLA
15,824.9m2 (includes outdoor seating of 197.2m2, but excludes storage of 125.6m2).
Parking
220 spaces reflecting 1 space/72m2 of NLA).
Vacancy
4.5%
No of Tenants
10
Net Passing Income
$7,265,179pa
Inputs
Analysis
Market Rentals
Office:
Retail:
2
$380 - $470/m net
2
$400 - $1,020/m net
7.9%
Core Market Yield*
8.4%
IRR (after costs)
9.56%
Avg Cmpd Mkt Growth
3.3% (10 year horizon)
Outgoings
Advised - $87.87/m2 Adopted - $100/m2
100%
Terminal Yield
8.5%
Rate/m² NLA
$5,814/m²
Leasing Allowance
Average term of 9 months for existing vacancies, with
10% (gross) incentives. 6 to 18 months for future
expiries and incentive ranging from 20% to 27.5%.
Income
Area
Capital Expenditure
Ongoing allowance of $25/m² linked to CPI,
commencing in Year 4, plus $150/m² at each lease
expiry, linked to tenant retention.
6.5 years
6.5 years
5%
100%
30%
30%
2%
1%
1%
1%
90%
80%
70%
60%
50%
40%
30%
20%
1%
0%
9%
1%
10%
19%
Treehouse
Vodafone
Tech Mahrinda
Real Insurance
Lend Lease
Other Income
Car Park
Vacant
Korean BBQ
Drycleaner
Jamaica Blue
Salon
0%
Current
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Future Expiries
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Comments
x
x
x
x
x
x
The asset has sold after an extensive marketing campaign via Expressions of Interest, which closed 13 September 2012.
It was purchased by FKP in 2007 for $98 million, and refurbished in 2012 at a cost of $13 million (per Cityscope).
We understand the vendor will pay out all existing incentives at settlement.
The vacancies are all in the retail component and the purchaser takes on the leasing risk with current vacancies.
It has an excellent tenancy profile with the tenant list including Vodafone, Real Insurance, Tech Mahrinda and Lend Lease.
The car park is leased to operator Enacon.
Sales Analysis
Sales Analysis
The Clemenger Building,
118-120 Pacific Highway, St Leonards, NSW
Sale Date
December 2012
Sale Price
Vendor
Stockland
Purchaser
Private Investor
Description
A B-grade, 1987 completed multi-level commercial office building comprising 3 levels of
basement parking for 151 secure parking spaces, foyer and lift lobby, together with 7 levels of
office accommodation and roof-top plant rooms. Recent upgrades have been conducted to the
lifts, bathrooms/kitchenettes, external building works, the main entrance in 2008 and a foyer
refurbishment in 2009.
NABERS Rating
Energy:
4.0 Star
Water:
4.0 Star
Land Area
1,792m2
NLA
5,130.7m2
Parking
Vacancy
0%
No of Tenants
2 (Clemenger – 100% office & Secure Parking – 151 spaces)
Net Passing Income
$2,177,455pa
Inputs
Analysis
Market Rentals
Office:
$450/m2 to $510/m2 gross
Parking
$300/space/mth (applied with ongoing vacancy)
9.0%
Core Market Yield*
9.3%
9.0%
Avg Cmpd Mkt Growth
3.6% (10 years)
Outgoings
$139.88/m2
IRR (after costs)
9.3%
Terminal Yield
9.25%
97.6%
Leasing Allowance
We have allowed 18 months downtime (at 50% retention) & 25%
gross incentive (75% application) in year 6 of the cash flow.
Rate/m² NLA
$4,717/m²
Capital Expenditure
An ongoing allowance of $15/m2 pa, linked to tenant retention, plus
$150/m2 at each lease expiry.
Income
5.2 years
Area
5.8 years
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for property specific
issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
100%
90%
1%
80%
90%
70%
60%
50%
40%
30%
20%
10%
9%
0%
Current
Clemenger
Secure Parking
Optus
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Future Expiries
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Comments
x
x
x
x
x
x
The subject sold via an expressions of interest marketing campaign and subsequent extended due diligence/negotiation period.
The vendor will cover any outstanding incentives.
Clemenger have been long term tenants within the building and have recently extended their leasing commitment over 100% of the office component via several new
leases to 30 September 2018.
We understand the car parking lease to Secure Parking does not incorporate a provision for the recovery of parking levies. We are also advised that this amount is
currently $115,500pa and we have accounted for this within our calculations.
We consider the outgoings are somewhat high relative to surrounding St Leonards assets. However they are reflective of current budged outgoings and past actuals. If
the new owner is able to reduce the outgoings (operating costs), then the passing/core market yields would increase relatively, due to the gross nature of the leases.
We understand that a capital works/incentive was provided to Clemenger and that part of this has been utilised and the remaining portion is sitting in trust which
Clemenger may draw upon. This is not a cost/negotiation that burdens the purchaser and therefore does not form part of our assessment.
Sales Analysis
Sales Analysis
100 Christie Street, St Leonards NSW
Sale Date
December 2012
Sale Price
Vendor
LIF P/L
Purchaser
Altis Property
Description
A multi-storey commercial building comprising two levels of basement parking, a ground
floor retail and ground floor commercial tenancy, eleven upper levels of office
accommodation, plus roof top plant rooms.
NABERS Rating
Energy:
Land Area
2,413m2
NLA
9,994.4m2
Parking
80 spaces reflecting 1 space/125m2 of NLA
Vacancy
0% by NLA, however there are 12 vacant car spaces.
No of Tenants
5
Net Passing Income
$4,459,308pa (Reflects fixed review of 3.5% for SKM as at 1 November 2012).
4 Star
Inputs
Analysis
Market Rentals
Office:
$490/m2 gross
Parking:
$390/space/month ++
Core Market Yield*
10.7%
IRR (after costs)
9.4%
10.6%
Avg Cmpd Mkt Growth
3.6%
Outgoings
$824,388 reflecting $82.48/m2 (adopted)
100.8%%
Terminal Yield
10.75%
Rate/m² NLA
$4,202/m²
Leasing Allowance
18 months vacancy/downtime allowance in Year 4
coinciding with the SKM lease expiry. 50% tenant
retention.
Income
Area
Capital Expenditure
Ongoing allowance of $20/m² (except in Years 4 & 5),
make good allowance of $120/m² linked to tenant
retention (except in Year 4), plus $500/m² (of SKM
tenancy area) refurb allowance at SKM lease expiry.
NPV of capex = $4,963,603.
3.4 years
3.4 years
100%
90%
80%
95%
1%
70%
60%
50%
40%
30%
20%
1%
10%
3%
SKM
0%
ALF Import
Mojarra
HCT (Bridges)
Vacant
Current
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Future Expiries
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Comments
x
The subject property was sold by private treaty after an extensive marketing campaign which commenced in 2011.
x
We understand the vendor paid out any outstanding incentives at date of sale.
x
Sinclair Knight Merz (SKM) are the majority tenant with 95.5% of the NLA. Their lease expires 30 June 2016.
x
The relatively high passing initial and core market yields are a product of the risk associated with the SKM lease expiry in June 2016. Market speculation has
SKM anchoring the Winten development on the southern side of the Pacific Highway when their lease expires in the subject property.
x
We have allowed for a $500/m2 refurbishment of the SKM tenancy at lease expiry.
x
The exit strategy for this asset is potentially a residential conversion/redevelopment.
Sales Analysis
Sales Analysis
Building B1, Gore Hill Business Park
219-247 Pacific Highway, Artarmon NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
Land Area
GLA
Parking
Vacancy
No of Tenants
Net Passing Income
December 2011
$60,000,000 GST Exclusive
Lindsay Bennelong Developments
Securus Guernsey 2 Limited
A Tier 3 designed and purpose built, four and part five level data centre constructed
in 2011 within the developing Gore Hill precinct. It will comprise 2 levels of data
storage halls, office and specialised plant areas, as well as on grade parking for 34
cars. The building will offer large floor plates in the order of 3,250m2.
6,692m2
11,463m2
34 spaces reflecting 1 space/337m2
Nil.
1 – Fully leased to the Australian Stock Exchange for 15 years at a net face rent of $385/m2 with 3.5% annual reviews. 34 on grade car
spaces are also provided at $3,500 pa.
$4,532,255 pa (fully leased).
Inputs
Analysis
Market Rentals
Data Centre: $385/m² net
7.6%
Avg Cmpd Mkt Growth
Outgoings
Terminal Yield
Leasing Allowance
Parking: $3,500pa/space
3.5%
$47.37/m²
8.0%
There is no leasing downtime throughout the 10 year cash flow.
Core Market Yield *
IRR (after costs)
Rate/m² NLA
7.6%
9.6%
100%
$5,234/m²
12.0 years **
Capital Expenditure
$25/m² ongoing linked to CPI.
**Reflects the break clause at the end of Year 12.
Data Centre
100%
% of Net Lettable
Area
100%
80%
60%
40%
20%
0%
Current Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
x
The property has been sold on the basis of being fully leased to the ASX for a 15 year lease term in shell form.
x
The ASX (top 50 ASX listed company) has the right to break the lease at the end of year 12, subject to 2 years notice.
x
The property has been designed and purposes built to data centre specialised specifications and is provided in a core and shell form.
x
It is reported that the ASX will spend approximately $35,000,000 on their specialised tenant fit-out and infrastructure.
x
At the expiration of the lease the tenant may make good back to core and shell or may be permitted to leave all plant and machinery in place for future use.
x
Although the purchase price was negotiated subject to the ASX fully occupying the asset, we are of the understanding that the ASX is to surrender approximately
45% (GLA) of the data centre to the purchaser who will then fit-out, operate and manage that component of the data centre within their own data centre fund.
Notwithstanding, the purchase price reflects fully leased to the ASX.
Sales Analysis
Sales Analysis
Building C, Gore Hill Business Park
219-247 Pacific Highway, Artarmon NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
December 2011
$82,700,000 GST Exclusive (approx)
Lindsay Bennelong Developments
Growthpoint Properties Australia Limited
An A–grade commercial building under construction within the developing Gore Hill
precinct having Pacific Highway frontage and due for practical completion in late 2012.
It will comprise 2 levels of basement parking for 182 cars, lower ground floor, ground
floor and café, plus 5 upper levels of office accommodation.
The building will offer large floor plates in the order of 1,600m2 up to 2,300m2.
A 5 Star NABERS rating and 5 Star Green Star rating are being targeted.
5,061m2
14,136m2
48% pre-commitment (52% of the NLA is subject to a 5 year rental guarantee).
1 – Fox Sports (Premier Media Group) have pre leased 48% of the NLA (6,790m2) for
10 years (from practical completion) at a net face rent of $430/m2 with 3.5% annual
reviews.
$6,720,730 pa (fully leased subject to rental guarantee).
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
Inputs
Analysis
Market Rentals
Avg Cmpd Mkt Growth
Outgoings
Terminal Yield
Leasing Allowance
Capital Expenditure
Office: $430/m² net
Café: $500/m² net
8.1%
Parking: $3,500pa/space
3.5% (post completion)
$55.45/m²
8.25%
12 months in years 5 and 10 (50% retention) plus associated
incentives. We have not accounted for any secondary expiry of
the 52% of NLA within the cash flow or terminal value calculation.
$25/m² ongoing linked to CPI (commencing in Year 5)
Core Market Yield*
IRR (after costs)
Rate/m² NLA
8.1%
9.2%
100%
$5,850/m²
7.4 years **
**Reflects the 5 year rental guarantee period only. The WALE is likely to improve upon leasing vacant areas.
Fox Sports
48%
100%
% of Net Lettable
Area
Rental
Guarantee
Café 1%
80%
60%
40%
20%
0%
Current
Rental
Guarantee
Office 51%
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
x
The property is being purchased “off market” on a structured fund through basis, noting that the developer will provide a coupon rate of 8.75% on payments
made through the construction period, with Growthpoint Properties not being exposed to any development risk. There are also stamp duty savings involved with
the purchase.
x
The developer will provide a 5 year rental guarantee for all vacant space (52% of the NLA) from practical completion.
x
All outstanding incentives are the responsibility of the vendor.
x
On completion the property will have a strong WALE of 7.4 years (minimum) subject to the 5 year rental guarantee, although this is likely to improve upon
leasing vacancies.
x
There is potential for the price to increase to reflect a higher initial and core market yield up to 8.0%, subject to certain leasing benchmarks being met, with an
achieved fully leased building having a WALE of 10 years or more being the upper benchmark.
Sales Analysis
Sales Analysis
75 George Street, Parramatta, NSW
Sale Date
December 2012
Sale Price
$32,550,000
Vendor
Stockland
Purchaser
Corval
Description
Comprises a circa 1985 (progressively upgraded) 6 level, A-grade office tower located
within the Parramatta CBD. The building provides two ground level retail tenancies
(330.9m²) and five upper office levels within a twin tower configuration with linked
central services core. Average floor plate size of 1,850m². 104 car spaces are provided
over basement and ground levels. The building has achieved a 3.5 Star NABERS rating
whilst major tenants include St George Bank and Hanson Construction (3.8 year
WALE).
NABERS Rating
3.5 Star energy rating
Land Area
2,668m2
NLA
9,535m2
Parking
104 spaces
Vacancy
0.0% of NLA (4 car spaces vacant)
Major Tenants
St George Bank (68.0% of NLA) & Hanson Construction (19.5% of NLA)
Net Passing Income
$3,275,299
Inputs
Analysis
Office:
$315/m² net ( $430/m² gross)
9.91%
Parking:
$275 per space pcm
Core Market Yield*
10.14%
Avg Cmpd Mkt Growth
3.6% pa (5 year) 3.4% pa (10 year)
IRR (after costs)
9.85%
Outgoings
$114/m²
Rate/m² NLA
$3,414/m²
Terminal Yield
10.0%
Income
Area
Leasing Allowance
6-18 months and an average 17% gross incentive over
10 year horizon at 50% retention and an 85% incentive
probability factor.
Capital Expenditure
$3,311,562 (10.17%) over 10 year cashflow
3.8 years
3.8 years
100%
66%
90%
80%
70%
60%
50%
40%
30%
20%
1%
4%
10%
3%
0%
5%
Current
21%
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Future Expiries
St George Bank
Hanson Construction
Foodoo Investments
Reachlocal Australia
Macros Accountants
Vacant
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Chandler Macleod
Comments
Low rise commercial office accommodation constructed circa 1985 (progressively upgraded) and provides A-grade accommodation over Levels 1-5, two Ground Level
shops and 104 car spaces over basement and ground Levels. Sold fully leased (3.8 year WALE) with major building tenants comprising St George Bank (68.0% of NLA) &
Hanson Construction (19.5% of NLA) whose respective leases expire in May 2017 and September 2016 with fixed 3.5% annual increases for both tenants. Sold via an
Expressions of Interest campaign with provision made by the vendor to cover all outstanding incentives.
Sales Analysis
Sales Analysis
18 Smith Street, Parramatta, NSW
Sale Date
December 2012
Sale Price
$47,500,000
Vendor
Capital Corporation
Purchaser
Altis Property Group
Description
Comprises a modern (completed circa 2001) 12 level, A-grade office tower located
within the Parramatta CBD. The building provides two ground level retail tenancies
(590m²) and ten upper office levels (Levels 1 and 4-12) with an average floor plate size
of 1,245m². 170 car spaces are provided over basement, ground and Levels 1-2. The
building has achieved a 4 Star NABERS rating whilst major tenants include Telstra and
Suncorp (3.2 year WALE).
NABERS Rating
4 Star energy rating
Land Area
1,921m2
NLA
12,041m2
Parking
170 spaces
Vacancy
5.6% of NLA
Major Tenants
Telstra (50.7% of NLA), Suncorp-Metway (20.8% of NLA), Pepper Aust (9.5% of NLA)
Net Passing Income
$4,682,860 (reflects 1 Jan 2013 fixed increases to Telstra & Suncorp-Metway)
Inputs
Analysis
Office:
$350/m² net ( $440/m² gross)
9.9%
Parking:
$275 per space pcm
Avg Cmpd Mkt Growth
3.6% pa (5 year) 3.4% pa (10 year)
Core Market Yield*
10.2%
IRR (after costs)
9.7%
Outgoings
$90/m²
Rate/m² NLA
$3,963/m²
Terminal Yield
10.0%
Income
Area
Leasing Allowance
probability factor.
Capital Expenditure
3.2 years
3.3 years
55%
100%
90%
6%
1%
80%
70%
60%
50%
40%
30%
20%
21%
2%
5%
10%
0%
Current
10%
Telstra
Suncorp-Metway
Pepper Australia
AEC
My Roast
CBRE
Vacant
Employers Mutual
Yr 1
Yr 2
Yr 3
Yr 4
Yr 5
Future Expiries
Yr 6
Yr 7
Yr 8
Yr 9
Yr 10
Yr 11
Vacant
Comments
12 level, A-grade office tower (circa 2001) located within the Parramatta CBD providing two ground level retail tenancies (283m²), ten upper office levels (Levels 1 and 412) and 170 car spaces provided over basement, ground and Levels 1-2. Sold 94.4% leased (3.2 year WALE) with major building tenants comprising Telstra (50.7% of
NLA), Suncorp-Metway (20.8% of NLA),with respective expiries of December 2015 and December 2014 and fixed annual 3.75% increases to both tenants. Sold via an
Expressions of Interest Campaign and we are advised there were no outstanding incentives at the date of sale, nor were any rental guarantees over vacant space provided
by the Vendor.
Sales Analysis
Sales Analysis
‘Eclipse Tower’ 60 Station Street, Parramatta, NSW
Sale Date
November 2012
Sale Price
$167,500,000
Vendor
Grosvenor & Leighton Properties
Purchaser
REST
Description
‘Eclipse Tower’ comprises a new (completed September 2012) 20 level, A-grade office
tower located within the Parramatta CBD. The building provides two ground level retail
tenancies (590m²) and nineteen upper office levels with an average floor plate size of
1,320m² in addition to two levels of basement parking (145 car spaces). The building
has achieved a 5 Star Green Star rating. Major tenant pre-commitments included
Deloittes, QBE Insurance and Landcom and provides a WALE of 8.6 years.
NABERS Rating
Energy:
5 Star energy rating (targeted level)
Green Star:
5 Star Green Star Office Design
Land Area
3,216m2
NLA
25,728m2
Parking
145 spaces
Vacancy
Nil – subject to rental guarantees over vacant space (circa 17% of NLA)
Major Tenants
QBE Insurance (46.3% of NLA), Deloittes (20.6% of NLA), Landcom (10.3% of NLA)
Net Passing Income
$12,145,000
Inputs
Analysis
Office:
$450/m² net ( $543/m² gross)
7.25%
Parking:
$275 - $300 per space pcm
Avg Cmpd Mkt Growth
3.6% pa (5 year) 3.4% pa (10 year)
Core Market Yield*
7.35%
IRR (after costs)
9.1%
Outgoings
$93/m²
Rate/m² NLA
$6,510/m²
Terminal Yield
7.50%
Income
Area
Leasing Allowance
probability factor.
Capital Expenditure
8.6 years
8.6 years
Comments
This sale represents the largest suburban office transaction in Sydney in recent times and one of the largest investment sales to occur within the Parramatta CBD.
The building is circa 85% leased with the balance of three office floors, single retail tenancy and vacant car spaces subject to 18 month rental guarantees. We are also
advised that the vendor will be responsible for any incentives relating to vacant areas at the date of sale and accordingly our calculations have reflected these terms. The
property was acquired off market post completion and relative to other passive asset sales nationally represents a strong result.
Sales Analysis
Sales Analysis
Lang Centre 132 Marsden Street, Parramatta
Sale Date
August 2012
Sale Price
$25,525,000
Vendor
Centuria (Strategic Property Holdings No.7 P/L)
Purchaser
Private Investor (Sandran)
Description
A strata titled (two lots) 7-storey B-grade commercial building completed in 1986
comprising ground level (retail/service commercial/child care centre), 231 car spaces
over Levels 1-2 and four levels of office accommodation over Levels 3-6.
Prominently located on the corner of Marsden Street and Hunter Street within the
western precinct of Parramatta’s CBD approximately 400 metres from the railway
station.
NABERS Rating
3.5 Star Energy
Land Area
3,088m²
NLA
9,789.2m²
Parking
231 spaces (Levels 1 & 2)
Vacancy
0% (by NLA)
No of Tenants
5 tenants
Net Passing Income
$2,959,569 p.a.
Inputs
Analysis
Market Rentals
Office:
Avg Cmpd Mkt Growth
$380/m² - $410/m² p.a. gross
3.6% p.a. gross (10 year) @ 18.5% avg incentive
11.6%
Core Market Yield*
10.1%**
3.4% p.a. gross (5 year)
**We note that the above Core Market Yield accounts for the potential
expiry of the major building tenant (88% of NLA) in 2015 and is therefore
risk adjusted to some extent. The sale price reflects a Core Yield closer
to 12.5% before accounting for the major tenant expiry.
Outgoings
$90/m²
IRR (after costs)
9.9%
Terminal Yield
10.25%
89.2%
Leasing Allowance
6-18 months downtime 15%-22.5% incentives over 10
Rate/m² NLA
$2,607/m²
Capital Expenditure
$30/m² p.a. ongoing and $150/m² make good at lease
expiry.
Income
Area
3.2 years
3.2 years
100%
80%
60%
40%
20%
0%
Current
All Image
Bonsai Rising
Glory Childcare
OSR
Secure Parking
Vacant
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
B-grade strata titled building (two lots only) prominently located in the western precinct of Parramatta CBD, being a popular location for Government tenants. The major
tenant is the Office of State Revenue (OSR) who occupy approximately 88% of NLA with a lease expiry of November 2015. The building enjoys dual street frontage
2
(Marsden and Hunter Streets) with large circa 1,895m floor plates with central core considered well suited to subdivision and is of good base building quality. Secure
Parking lease 163 car spaces under a lease expiring November 2015. The property was purchased subsequent to marketing via an Expressions of Interest (EOI) campaign
(initially closing March 2012).
Sales Analysis
Sales Analysis
7 Murray Rose Avenue, Sydney Olympic Park, NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
June 2012 (terms agreed)
$29,250,000 GST Exclusive
SOP 8B Pty Ltd (FDC Property Pty Ltd & Audley Pty Ltd)
Folkestone Real Estate Income Fund at Sydney Olympic Park
A 6 level commercial building “under construction” which will comprise five levels of
office accommodation and ground floor retail, together with two levels of basement
parking 53 cars. The building will offer floor plates in the order of 1,050m2 and is
centrally within Sydney Olympic Park. This transaction represents the sale of a 99 year
leasehold interest to Sydney Olympic Park Authority.
Targeting a minimum 4.5 Star NABERS rating.
1,170m2
5,968.8m2
0% (NLA) – (701.6m2 of retail & 6 car spaces - subject to a 12 month rental guarantee).
The 5 office levels (5,267.2m2) & 47 cars are to be fully leased to Thales Australia for 10
years.
$2,330,264 pa (upon completion accounting for 12 month rental guarantee)
Inputs
Analysis
Market Rentals
Avg Cmpd Mkt Growth
Outgoings
Terminal Yield
Leasing Allowance
Office: $345/m² net
Retail: $550/m² net
Parking: $2,400pa/space (security)
3.6% (over 10 years)
$60/m² (estimated)
8.25%
No current vacancies.
8.0%
Core Market Yield*
IRR (after costs)
Rate/m² NLA
8.0%
9.2%
100%
$4,900/m²
8.5 years (income)
Between 6 & 12 months throughout the cash flow
horizon and incentives 20% (75% incentive probability).
Capital Expenditure
$1,280,984 throughout the cash flow horizon, reflecting
4.4% of current value.
Rental Guarantee
17%
100%
Thales Australia
83%
80%
60%
40%
20%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
x
A 99 leasehold interest purchase, subject to a peppercorn rent of $1 for the entire lease term. Acquired off market.
x
We advised that outstanding incentives and the 12 month retail rental guarantee will be covered by the vendor.
x
The date of practical completion is scheduled to be 24 October 2012 with the Thales lease to commence 1 December 2012.
x
The building is targeting a 5 Star Green Star – Office Design v3 rating.
x
The transaction involves the fund acquiring (land & works) to date, the making progressive payments until practical completion.
x
The entire office component (88% of NLA) will be leased by Thales Australia for 10 years, plus 2 x 5 year options. Rent reviews are 3.5% annual increases.
x
This sale represents the second major commercial office investment transaction to occur in Sydney Olympic Park since Centuria’s acquisition of 8 Australia
Avenue for $30,150,000 in April 2011 which reflected a core market yield of 8.6% and having a WALE of 6 years.
Sales Analysis
Sales Analysis
12 Waterloo Road, Macquarie Park NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
June 2012
Investa Funds Management Limited
Centennial Property Group
A four (4) level office building located at the southern end of Waterloo Road within the
Macquarie Park business precinct. Built in 1999, the property provides conventional
floor plates ranging in area from 950.3m² - 1,017.1m² with a centrally located service
core. The ground level is currently utilised as a laboratory and levels 1-3 feature
balconies. Parking is provided via a secure basement level combined with additional
uncovered on-grade parking surrounding the perimeter of the building.
1.5 Star NABERS rating
4,149m2
3,946.7m2
90 spaces (reflecting 1 space/44m²)
9.0% (NLA) – (Level 1, Suite 2)
5 tenants, with the major tenant (IBS) occupying 25.8% of the NLA (1,017.1m2) and 29
car spaces.
$1,089,475 pa net
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
Inputs
Analysis
Market Rentals
Avg Cmpd Mkt Growth
Outgoings
Terminal Yield
Leasing Allowance
Office:
$240 - $250/m² net
Parking:
$1,500pa/space for secure U/C spaces &
$1,000pa/space for on-grade parking.
$308,227 pa or $78.10/m² of NLA
10.0%
12 mths for current vacancies & 30.0% (gross)
incentives.
Core Market Yield*
12.0%
10.8%
IRR (after costs)
Rate/m² NLA
9.4%
111.7%
$2,306/m²
1.7 years (area)
Between 6 & 18 mths throughout the cash flow horizon
and incentives ranging from 20% to 30% (75% incentive
probability).
Capital Expenditure
Ongoing allowance of $20/m2 of NLA linked to CPI, plus
$150/m2 at each lease expiry.
Broadland Solutions
14%
100%
Vacant
0%
Oceanlinx
14%
Marcia Investments
29%
80%
60%
40%
20%
0%
Current
IBS Australia
28%
Yr 2
Yr 4
Yr 6
Yr 8
Yr 10
Isagenix
15%
Vacant
Future Expiries
Comments
x
Purchased after an Expressions of Interest campaign which closed on 8 March 2012. We understand that the purchaser – Centennial Property Group is a
consortium of private investors.
x
The current purchase price of $9,100,000 (June 2012) reflects a decline in value of approx. 26.6% from the previous sale of the subject in January 2007 for
$12,400,000.
x
Macquarie Park passenger railway station is located approximately 500 metres from the property.
x
Property benefits from a foyer upgrade undertaken in 2005.
x
The analysis assumes the purchaser takes on the leasing risk for current vacancies. It also assumes the vendor paid out any outstanding incentives at sale.
x
The vacant suite on Level 1 has been vacant for an extended period. The suite leased by Broadland Solutions (from 1 September 2011) had been vacant for an
extended period and the majority tenant (IBS Australia) is sub-leasing some of their space.
Sales Analysis
Sales Analysis
20 McIntosh Drive, Mayfield West, NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
NABERS Rating
Land Area
LA
Parking
Vacancy
No of Tenants
Net Passing Income
June 2012
Bradken Resources P/L
Private investment syndicate.
Current – Nil, vacant land.
Proposed – A purpose built multi-function building comprising partitioned and
open plan office, meeting rooms, conference room, laboratories, commercial
cafeteria, amenities, workshop, external multi-purpose building and on-grade
parking for 144 cars.
Energy: Not yet assessed
Water:
Not yet assessed
2
13,230m
2
Proposed – 7,163m
2
144 cars reflecting 1 space/50m (plus 27 visitor spaces and 7 motorbike
spaces).
Proposed – 0%
1
$1,526,250pa net (“As If Complete” as at the date of valuation).
Inputs
Analysis
Market Rentals
Office:
Mkt
8.5%
2
Core Market Yield*
8.5%
IRR (after costs)
10.5%
$230/m net
Laboratory:
Avg
Cmpd
Growth
2
$200/m net
2
Outgoings
$45/m of LA
100%
Terminal Yield
9.0%
Rate/m² NLA
$2,513/m²
Leasing Allowance
Not applicable.
(Yrs)
Income
Area
Capital Expenditure
$15/m of LA ongoing, linked to CPI, plus
2
$150/m at lease expiry.
15 years
15 years
2
Comments
x
x
x
x
x
A purpose built facility for Bradken Resources based on a 15 year lease from practical completion, anticipated early 2013.
The purchaser has agreed to purchase the completed building for $18,000,000 on a “fund through” basis, whereby they will settle the purchase of the
land for $2,500,000 as a cash transaction on or before 29 June 2012.
The purchaser will pay a deposit for the development contract of $1,550,000 (this amount reflects 10% of the outstanding balance of $15,500,000
after settlement of the land purchase).
There are no outstanding incentives at date of sale.
Bradken is an ASX listed top 200 company,
Sales Analysis
Sales Analysis
7 King Street, Concord West, NSW
Sale Date
May 2012
Sale Price
Vendor
Australian Property Growth Fund
Purchaser
Parangool P/L
Description
A modern single level call centre, purpose built for Westpac in 1997. It includes parking
for 480 cars (including 280 tandem spaces). Facilities include a gymnasium, change
rooms, cafeteria, basketball court and stand alone child care centre.
NABERS Rating
Energy:
Land Area
31,360m2
NLA
16,580m2 (by survey)
Parking
480 cars (including 280 tandem spaces) reflecting 1 space/35m2 of NLA
Vacancy
0%
No of Tenants
1
Net Passing Income
$4,108,107pa ($247.77/m2, including parking)
3.5 Star
Inputs
Analysis
Market Rentals
Avg Cmpd Mkt Growth
Office:
$240/m2 net
7.9%
Parking:
Single
$1,600pa/space
Core Market Yield*
8.3%
Tandem
$1,100pa/space
IRR (after costs)
9.2%
3.1%
2
Outgoings
$65/m
89.2%
Terminal Yield
8.5%
Rate/m² NLA
$3,136/m²
Leasing Allowance
Not Applicable
Income
Area
Capital Expenditure
$200/m2 at lease expiry, linked to tenant retention.
10.4 years
10.4 years
100%
80%
60%
40%
20%
0%
Current
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
x
The property previously transacted at $60,750,000 in July 2007.
x
Westpac fully occupy the property and have signed a 10 + 5 + 5 year lease from 2 October 2012. Commencing rental will be $4,620,000pa net (inclusive of
parking), reflecting $278.65/m2, and reviews are annual adjustments in line with CPI + 0.5%.
x
As an inducement to sign the lease, Westpac where given an incentive of $5,000,000 spread evenly over the term and it could be taken in the form of
contribution to fit-out, rental rebate or a combination of the two. We have analysed the sale on the basis of the incentive being taken as a rental rebate of
$500,000pa for the term of the lease.
x
We have adopted outgoings reflecting $65/m2 of NLA, which is at the lower end of suburban outgoings and reflects the single tenant occupancy of the asset.
x
The potential exit strategy for this property is medium density residential redevelopment, with an adjoining site developed for 320 residential units and some
retail/commercial space.
Sales Analysis
Sales Analysis
16-18 Wentworth Street, Parramatta, NSW
Sale Date
April 2012
Sale Price
$18,000,000
Vendor
LaSalle Australia Core Plus Fund
Purchaser
Private Investor
Description
An 8-storey B-grade commercial building with parking for 73 cars on three basement
levels; completed mid-1991. The building has an open terrace to the first level
accommodation fronting Wentworth Street and ground floor fronting Valentine Avenue
with 7 upper levels of office accommodation. The building is positioned within the
southern Parramatta’s CBD precinct about 200 metres from the railway station.
NABERS Rating
3 Star Energy
Land Area
1,333m²
NLA
6,672.8m²
Parking
73 basement spaces
Vacancy
0% (by NLA)
No of Tenants
8 office tenants
Net Passing Income
$1,646,380 p.a.
Inputs
Analysis
Market Rentals
Office:
$350/m² - $375/m² p.a. gross
Avg Cmpd Mkt Growth
3.6% p.a. gross (10 year) @ 18.5% avg incentive
9.1%
Core Market Yield*
9.5%**
3.4% p.a. gross (5 year)
**We note that the above Core Market Yield accounts for the potential
expiry of the major building tenant (46% of NLA) in 2014 and is therefore
risk adjusted to some extent. The sale price reflects a Core Yield closer
to 10.5% before accounting for the major tenant expiry.
Outgoings
$93/m²
IRR (after costs)
10.0%
Terminal Yield
10.00%
88%
Leasing Allowance
6-9 months downtime 15%-22.5% incentives over 10
Rate/m² NLA
$2,698/m²
Capital Expenditure
$25/m² p.a. ongoing and $150/m² make good at lease
expiry.
Income
Area
1.9 years
1.9 years
Ministry of Transport
47%
Department of
Education
10%
100%
90%
80%
Empower IT
Solutions
3%
The University of
Sydney
5%
State Rail Authority
13%
Australian Vocational
Centre
14%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Yr 4
Yr 6
Yr 8
Yr 10
Pentana Solutions
7%
Vacant
Future Expiries
Comments
B-grade building well located in the southern precinct of Parramatta CBD, being a popular location for Government tenants. The major tenant is the Ministry of Transport
who occupy approximately 46% of NLA with a lease expiry of January 2014. The building enjoys dual street frontage (Wentworth and Valentine Streets) with circa 875m2
floor plates and provides reasonable quality office accommodation albeit with slightly irregular/elongated floorplates. We understand the property was purchased by way of
a direct offer (not actively marketed) at a level consistent with the vendor’s book value and reflects relatively tight investment parameters.
Sales Analysis
Sales Analysis
75 Talavera Road, Macquarie Park NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
March 2012
Challenger Listed Investments Limited
Macquarie University
A 9 level commercial office building completed in 1999 comprising 2 levels of basement
parking for 250 cars, ground floor lobby and office, with 6 upper levels of office
accommodation. It also provides 35 on grade car spaces. The building offers good floor
plates in the order of 1,600m2 up to 2,000m2 and is situated within Macquarie University
Research Park. This transaction represents the sale of the leasehold interest, being
subject to a long term ground lease (circa 87 years remaining) to Macquarie University.
2.5 Star NABERS rating
7,237m2
13,427.5m2
28.0% (NLA) – (Ground and Level 1)
5 tenants, with the major tenant (Luxottica) occupying 42.5% of the NLA (5,713m2) and
119 car spaces.
$2,233,325 pa (accounting for non recoverable ground rent)
NABERS Rating
Land Area
NLA
Parking
Vacancy
No of Tenants
Net Passing Income
Inputs
Analysis
Market Rentals
Office: $280 - 290/m² net
Parking: $2,100pa/space (security)
$1,100pa/space (on grade)
$88.26/m² (including non recoverable ground rent)
9.0%
9 mths for current vacancies & 27.5% (gross) incentives
(50% retention probability).
Avg Cmpd Mkt Growth
Outgoings
Terminal Yield
Leasing Allowance
Core Market Yield*
5.5%
8.8%
IRR (after costs)
Rate/m² NLA
9.5%
90%
$3,016/m²
4.3 years (area)
Between 6 & 18 mths throughout the cash flow horizon
and incentives ranging from 20% to 25% (75% incentive
probability).
$4,513,813 throughout the cash flow horizon, reflecting
11.1% of current value.
Capital Expenditure
100%
Upstream Print
16%
Dept of Education
8%
% of Net Lettable
Area
Toyota
13%
Multilit
6%
80%
60%
40%
20%
0%
Current Yr 2
Luxottica
57%
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
x
The leasehold interest was purchased “off market” by Macquarie University who own the Freehold title.
x
Any outstanding incentives are the responsibility of the purchaser.
x
This sale represents the first major commercial office investment transaction to occur in Macquarie Park/North Ryde since the “on completion” acquisition of 78
Waterloo Road for $67,000,000 in August 2007 by Stockland Trust, prior to the Global Financial Crisis.
x
We understand that Macquarie University intend to owner occupy the existing vacant office area on the ground and Level 1.
x
Macquarie University Hospital is adjacent, whilst Macquarie Shopping centre and Macquarie University Railway Station are within close walking distance.
Sales Analysis
Sales Analysis
520 Smollett Street, Albury NSW
Sale Date
Sale Price
Vendor
Purchaser
Description
November 2012
$51,500,000
Volt Lane Pty Ltd
AR Management
A modern 7 level office building completed in October
2012 w hich has been designed to achieve a 4.5 Star
NABERS energy rating and 5 Star green Star rating. The
ground floor accommodates tw o retail tenancies w ith the
majority of the building (96%) being high quality office
accommodation. Basement car parking for 56 vehicles is
also provided. Strong CBD location w ithin the NSW
regional city of Albury, approximately 300 kilometres from
Melbourne.
Insert Photo
1,989.0 m²
Office
10,348.5 m²
Retail
460.0 m²
Total
10,808.5 m²
56 Basement Spaces
0.0%
4
Commonw ealth of Australia (ATO)
$4,140,418
Site Area
NLA
Parking
Vacancy
No. of Tenants
Major Tenant
Net Passing Incom e
Inputs
Analysis
Office
$414/m² pa
8.04%
Retail
$450/m² pa
Core Market Yield
8.04%
Average 10 yr Com pound
Rental Grow th
Office
Retail
2.2%
2.7%
10 year IRR (after costs)
9.38%
Rate/m ² of NLA
$4,765/m²
Outgoings
Term inal Yield
$48/m² pa
9.00%
Income
Area
15.1 yrs
14.5 yrs
Average 10 yr
Leasing allow ances
Office
Weighted Average Reversion Term
Income
Area
15.1 yrs
14.5 yrs
(befo re renewal/retentio n
assumptio ns)
Retail
Average 10 yr Tenant
Retention Assum ptions
Office
Retail
Capital Expenditure
At Expiry
$300/m²
Sinking Fund $10/m² pa plus $55/m² of the office NLA to repaint and recarpet as per the lease
% of Value 2.3%
Avg Incentive
Dow ntime
Avg Incentive
Dow ntime
8.3%
9 mths
5.0%
3 mths
Weighted Average Rebate Expiry (WARE)
0.0 yrs
75%
50%
*Co re M arket Yield = the percentage return/yield analysed when the assessed fully leased net market inco me is divided by the ado pted value/price which has been adjusted
to acco unt fo r pro perty specific issues (i.e. rental reversio ns, rental do wntime fo r imminent expiries, capital expenditure, current vacancies, incentives, etc).
Serviced
Accom.
1%
Rent
Guarantee
3%
Comments
Café
4%
Comm. of
Australia
92%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Future Expiries
Vacant
The office component and 25 car bays w ere leased to the Australian Tax Office for 15 years from completion of the building. Tw o ground floor
retail tenancies w ere either leased or subject to a rental guarantee for 5 years. The remaining 31 car bays w ere leased to a neighbouring
property ow ner for 50 years.
The property sold via an expressions of interest campaign w ith a sale price of $51,500,000 negotiated in August 2012 w hich w as based on an
initial yield of 8.06% w ith the vendor being liable for outstanding incentives. Subsequent negotiations resulted in the purchaser inheriting the
outstanding incentives and the original sale price w as consequently adjusted to reflect this, as w ell as liabilities for a delayed settlement. Our
analysis is based on the original sale price.
The abo ve info rmatio n is purely fo r the purpo se o f a bro ad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The
info rmatio n co ntained within may be co nfidential and must no t be repro duced o r circulated witho ut the written co nsent o f Knight Frank Valuatio ns.
Canberra Commercial Sales Analysis
Sales Analysis
Sales Analysis
10 – 12 Mort Street Canberra, ACT
Sale Date
June 2012
Sale Price
$55,800,000 (exclusive of GST)
Vendor
GPT
Purchaser
Growthpoint Properties
Description
Two adjoining, circa 1990 built six (6) level office buildings situated on the corner of Mort
Street and Bunda Street in the Canberra CBD. The buildings have recently undergone
significant refurbishment works designed to achieve a 4.5 Star NABERS rating. Base
plant items largely remain unchanged however. Basement parking for 165 vehicles is
accessed via a rear laneway.
NABERS Rating
Energy:
Land Area
3,064m²
NLA
15,295m²
Parking
165 basement bays
Vacancy
Nil
No of Tenants
1
Net Passing Income
$5,751,287
4.5 star (targeted)
Inputs
Analysis
Market Rentals
Office:
$400/m² gross face
10.31%
Car Parking:
$3,250 per single bay and
$4,000 per tandem bay
Core Market Yield*
9.95%
Avg Cmpd Mkt Growth
2.7% 10 years
IRR (after costs)
10.07%
Outgoings
$73.53/m² (based on operating costs prior to
refurbishment works)
103.2%
Terminal Yield
10.50%
Rate/m² NLA
$3,648/m²
Leasing Allowance
Not applicable
Income
Area
Capital Expenditure
$100/m² make good allowance, plus ongoing annual allowances throughout the second half of the cash flow.
4.7 years
4.7 years
We have also allowed $200/m² at the expiry of the current lease (Year 6) to upgrade plant items.
100%
Other
0%
Parking
9%
Retail
0%
Office
91%
80%
60%
40%
20%
0%
Current
Yr 2
Future Expiries
Yr 4
Yr 6
Yr 8
Yr 10
Vacant
Comments
The property was subject to a recently commenced 5 year lease to DEEWR, which expires in March 2017. A 5 year option for renewal is also provided. Annual reviews are
fixed at 3.75%. An incentive totalling $7,874,563, equivalent to approximately 25%, was provided – though this was paid out by the vendor prior to sale.
The property sold via an expressions of interest campaign, after normal marketing period of circa 2 months to national property fund. At the date of sale, there was limited
interest in investment assets with sub 10 year WALES which impacted buyer demand.
The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The information contained
within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.
Knight Frank Valuations Canberra
Sales Analysis
Sales Analysis
50 Marcus Clarke Street Canberra, ACT
Sale Date
27 February 2012
Sale Price
$225,888,000 (exclusive of GST)
Vendor
Walker Corporation
Purchaser
CIMB Trust Capital
Description
Twelve level office building constructed in 2011 with three levels of basement car
parking for 424 cars. The property was designed to achieve modern environmental
benchmarks and features include a tri-generation plant, grey water recycling and
NABERS energy of 5 stars. The building is currently operating at 5.5 stars with no
green power.
NABERS Rating
Energy:
Land Area
4,801m²
NLA
40,861m²
Parking
424 basement bays and 22 motor bike spaces
Vacancy
Nil
No of Tenants
1
Net Passing Income
$16,630,167
5.5 star
Inputs
Analysis
Market Rentals
Office:
$433/m² gross ex GST
7.36%
Storage:
$192/m² gross ex GST
Core Market Yield*
7.36%
Avg Cmpd Mkt Growth
2.7% 10 years
IRR (after costs)
9.10%
Outgoings
$54.36/m²
100%
Terminal Yield
7.75%
Rate/m² NLA
$5,518/m²
Leasing Allowance
6 months for communications aerials
Income
Area
Capital Expenditure
$10/m² for repainting in year 7 and $45/m² in year 9
for recarpeting plus $50,000 pa.
13.4 years
13.4 years
Other
1%
Office
91%
Parking
7%
100%
80%
60%
40%
20%
0%
Current Yr 2
Va c a nt
Yr 4
F u t u re E xp irie s
Yr 6
Yr 8
Yr 10
S e c o n d a ry E xp irie s
Retail
1%
Comments
The property was purpose designed and built to accommodate a Federal Government department (Department of Education, Employment and Workplace Relations,
DEEWR) for a 15 year term, 14 years from the expiry of the incentive period (total circa $21 million). A café on the ground floor is occupied under licence to a local operator
from the Government at the same terms and conditions as the primary lease. A communication aerial on the roof top is yet to be executed by Optus though documents are
drawn up.
Sales Analysis
Sales Analysis
2-6 Bowes Street Phillip ACT
Sale Date
April 2012
Sale Price
$14,000,000
Vendor
Receivers and Managers on behalf of Australian Public Trustees Limited
Purchaser
Quintessential Equities
Description
Penhryn House is a six level office building constructed circa 1986. The complex is
interconnected and is constructed across three blocks. It provides five levels of office
accommodation and one podium level of car parking for 131 cars. It is located in the
Woden Town Centre with public parking directly opposite. Major Government
departments in the precinct include Department of Health, HSA and IP Australia.
NABERS Rating
Energy:
0 Stars NABERS
Water:
N/A
Land Area
4,366m²
NLA
12,622m²
Parking
131 cars
Vacancy
3,987m²
No of Tenants
1
Net Passing Income
$1,627,150
Crown Lease Covenants
Purpose Clause:
Gross Floor Area:
To use the premises only for the purpose of offices and ancillary thereto one or more of the following – bank bar café restaurant club cooperative society health centre indoor recreation personal services PROVIDED ALWAYS THAT the area of the building used for other than
general offices shall not be more than:
(i)
1,500 square metres in respect of the development on Block 34 Section 8 Division of Phillip;
(ii)
1,000 square metres in respect of the development on Block 38 Section 8 Division of Phillip;
(iii)
1,000 square metres in respect of the development on Block 7 Section 119 Division of Phillip.
Total GFA 13,600 square metres.
Inputs
Market Rentals
Analysis
11.62%
Car parking: $2,000
Core Market Yield*
12.27%
Avg Cmpd Mkt Growth
2.7%
IRR (after costs)
13.99%
Outgoings
$59/m²
71.4%
Terminal Yield
13.5%
Rate/m² NLA
$1,109/m²
Leasing Allowance
12 months
Income
Area
Capital Expenditure
$950/m² to refurbish the building to 4.5 NABERS rating
at expiry of the existing lease in year 2 of the cash flow
Office:
$375/m² - $380/m², after refurbishment.
1.2 years
1.2 years
Comments
Penhryn House is a D-grade office building currently occupied on short term leases by Department of Human Services until November 2013. Prior to a long term
commitment by a tenant it will require a major refurbishment to bring it to a 4.5 star NABERS rating. We have allowed $950/m² and 12 months to complete these works in
analysis. It is assumed that these works include preliminaries, full mechanical upgrade, lifts, new foyer, replace single glazed windows, new bathrooms, carpets, ceilings
and upgrade fire systems. The Crown Lease permits office uses and a GFA of 13,600m² with a range of ancillary uses with a max of 3,500m² inclusive.
The property was sold by expression of interest on behalf of Receivers for Australian Public Trustees Limited by Colliers International. The purchaser is a developer who
intends to refurbish the building in order to re-lease.
may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations Canberra.
Sales Analysis
Sales Analysis
Caroline Chisholm Centre
57 Athllon Drive Greenway, ACT
Sale Date
1 March 2012
Sale Price
$83,000,000 (50% share)
Vendor
Allco (in receivership)
Purchaser
Frasers Property Trust
Description
Modern contemporary designed office complex completed in 2007. The premises were
purpose built and designed to house the Department of Human Services (formerly
Centrelink). The building is 5 levels in height and designed around a “main street”
concept that provides shared facilities along a central spine.
NABERS Rating
Energy:
Land Area
5.35 ha
NLA
40,244m²
Parking
1,098 bays including 154 undercover
Vacancy
Nil
No of Tenants
1
Net Passing Income
$14,429,781
4.5 star
Inputs
Market Rentals
Analysis
Office:
$410/m² gross
8.69%
Car Parking:
$1,500 per undercroft space pa
Core Market Yield*
8.83%
10.22%
$1,000 per on-grade space pa
Avg Cmpd Mkt Growth
2.8% 10 years
IRR (after costs)
Outgoings
$66.15/m²
98.5%
Terminal Yield
9.50%
Rate/m² NLA
$4,125/m²
Leasing Allowance
Nil
Income
13.4 years
Area
13.4 years
Capital Expenditure
Repainting ($10/m²) in 2013 and recarpeting due in 2016 ($35/m²) and $150,000 pa ongoing
Office
91%
Other
3%
Parking
6%
Retail
0%
100%
80%
60%
40%
20%
0%
Current
Vac ant
Yr 2
Yr 4
Future Expirie s
Yr 6
Yr 8
Yr 10
S e c o ndary Expirie s
Comments
Sale was for a 50% share of the property after the previous owner went into liquidation. Purchaser was Fraser Commercial Trust, the existing 50% owner who now owns
100% of the asset. The property was subject to an original 18 year lease with annual 3% increases, no market review for the term of the lease. There is a facilities
management agreement with Brookfield Multiple, full details are unknown at this stage however, we estimate that there is a shortfall of approximately $320,000 pa.
The building was designed to achieve a 4.5 star NABERS energy rating and is currently achieving a rating of approximately 4.87 stars. The building was sold on market via
an expression of interest campaign.
Adelaide Commercial Sales Analysis
Sales Analysis
Sales Analysis
101 Grenfell Street, Adelaide
Sale Date
January 2013 – Under Contract, Subject to Confirmation
Sale Price
$42,950,000
Vendor
Cromwell Properties
Purchaser
Private Syndicate
The property comprises a “B” grade, commercial office tower disposed as basement car
park, ground floor and 12 upper levels of office accommodation. The main tower and
southern annex were constructed about 1985, and the northern annex was constructed
at the same time in the shell of the former Grenfell Street Mail Exchange. This structure
is heritage listed. The land is zoned Capital City (Policy Area 13). The building is 100%
leased. The major tenant, South Australian Government leases approximately 90% of
the building until 2nd August 2018. The balance of the building is leased to four (4)
private tenants with expiries ranging from 2015 to October 2017.
Energy:
4.5 stars
Water:
4 stars
Description
NABERS Rating
Land Area
2,670m²
NLA
13,196.40m²
Parking
43 basement car parks
Vacancy
0
No of Tenants
5
Net Passing Income
$3,908,836 (excluding electricity profit)
$3,993,836 (including electricity profit)
Inputs
Analysis
Market Rentals
Office:
$368/m² to $417/m² p.a. gross
9.10%
Core Market Yield*
9.10%
10.2%
Avg Cmpd Mkt Growth
3.6% over 10 years (including a 7.3% spike in Year 7
following the significant capital expenditure at SA
Government lease expiry)
IRR (after costs)
Outgoings
$1,177,116 p.a.
100%
Terminal Yield
9.00%
Rate/m² NLA
$3,255/m²
Leasing Allowance
9 month let up period and 15% gross incentive on
vacancies assuming a 5 year notional lease term.
Income
Area
Capital Expenditure
$3,659,411 Structured as $150,000 in Year 1 (Lift
Upgrade), $150/m² in Year 6 (SA Govt Expiry), $75/m²
at Year 10 and $150/m² at lease expiries subject to
50% renewal probability, which equates to total capital
expenditure of 11.4% of purchase price over the 10
year cash flow
($89.20/m²)
5.2 years
5.2 years
Tan
Consulting
1%
McArthur
4%
AAPT
1%
100%
SA
Government
88%
80%
60%
40%
20%
0%
Perpetual
4%
Current
Yr 2
Yr 4
Future Expiries
Yr 6
Yr 8
Yr 10
Vacant
Comments
SA Government occupies approximately 90% of the building, generating 88.8% of income. The actual purchase price for the property was $43,100,000, however, $150,000
in immediate capital expenditure for the lift upgrade was made as capital contribution from the vendor back to the purchaser. We have adopted an amount of $85,000 in
electricity profit, capitalised at 20%. We note that the passing rental for SA Government is considered to be at the low end of market parameters, however we have not
allowed for an explicit market reversion as the market rent review for SA Government will occur in excess of five years time, being August 2018. The property sold off
market to a locally based private syndicate.
may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations
Sales Analysis
Sales Analysis
400 King William Street, Adelaide
Sale Date
October 2012 (Under Contract : Subject to Confirmation)
Sale Price
$97,900,000
Vendor
Theodoras Samaras
Purchaser
Real IS (German Fund)
Description
The property comprises a modern “A” grade office tower with large floor plates
constructed in late 2009, disposed as basement, ground floor retail and office and 10
upper floors of office. The property is located within the “Frame” precinct, at the
southern end of the Adelaide CBD. Approx. 57% NLA of the building is leased to State
and Federal Government departments, with the balance being predominantly private
local business.
NABERS Rating
Energy:
4.5 Star NABERS
Water:
4 Star NABERS
Land Area
2,606m²
NLA
22,873m² (excluding Basement = 21,643m²)
Parking
0 on site. (However, as vendor owns adjoining property an agreement was entered into
for 170 car parks to be made available at market rates)
Vacancy
0% (833m² of basement space subject to 5 year rental guarantee - 3.9% of NLA)
No of Tenants
10
Net Passing Income
$8,031,440 p.a.
Inputs
Market Rentals
Analysis
Office:
$409/m² gross to $457/m² gross
8.20%
Retail:
$445/m² gross to $561/m² gross
Core Market Yield*
8.20%
Avg Cmpd Mkt Growth
2.7% (average over 10 years)
IRR (after costs)
9.12%
Outgoings
$1,803,276
100%
Terminal Yield
8.75%
Rate/m² NLA (incl basement)
$4,279/m²
Rate/m² NLA (excl basement)
$4,525/m²
Income
By Area
Leasing Allowance
9 months (15% incentive)
Capital Expenditure
$10/m² p.a. $125/m² at lease expiries; $50/m² Yr 5 and
$100/m² in Yr 10.
7.2 years
7.2 years
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted
to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
Comments
No on-site car parking provided, although as vendor also owns adjoining deck car park, we understand a 99 year agreement was included to secure approximately 170 car
parks in this facility to pass with the subject holding. The property is under contract with settlement due 28 December 2012. We have therefore adopted the passing rent as
st
at 1 January 2013. The property is fully leased with the exception of 883m² of the basement, which is subject to a 5 year rental guarantee at $150/m² with fixed annual
increases at 3%.The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The
information contained within may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations.
Sales Analysis
Sales Analysis
169 Pirie Street, Adelaide
Sale Date
September 2012
Sale Price
$22,100,000 plus GST
Vendor
Bendigo and Adelaide Bank Ltd
Purchaser
Private Investor
Description
The property comprises a 6 level commercial office building of rendered masonry and
plate glass construction constructed circa 1980’s. It has on-site parking for 107 vehicles.
NABERS Rating
Energy:
Land Area
3,057m²
NLA
7,920m²
Parking
107
Vacancy
The property is under contract subject to vacant possession.
2.5 Stars
No of Tenants
The property is currently owner occupied by Bendigo and Adelaide Bank, who are
relocating to new ‘state of the art’ office accommodation now under construction at 80
Grenfell Street, and thus a deferred settlement period is available up to the end of 2013
or early 2014 .
We understand that the property has not been pre-committed as yet and that the
purchaser intends to spend a significant amount of capital refurbishing the property.
Sales Analysis
Sales Analysis
132 Grenfell Street Adelaide, SA
Sale Date
April 2012
Sale Price
$10,800,000
Vendor
GDI Funds Management
Purchaser
WA syndicate
Description
The property comprises character office building that was constructed in 1905, and
refurbished circa 2008. The property is currently disposed as ground floor and
basement retail with 3 upper levels of office serviced by a single lift. The property is
located on the northern side of Grenfell Street on a corner site also bounded by Twin
Street and Hindmarsh Square, within Adelaide’s ‘Core’ Precinct. The major tenant is
Bradford College (part of the Kaplan Group) which occupy approximately 68% of the
NLA over levels 1-3 and a portion of the basement.
NABERS Rating
Energy:
Land Area
865m²
NLA
3,156m²
Parking
Nil
Vacancy
0%
No of Tenants
7
Net Passing Income
$937,968 p.a.
N/A
Inputs
Analysis
Market Rentals
Office:
$404/m² p.a. gross face
8.68%
Retail:
$310/m² - $618/m² p.a. gross face
Core Market Yield*
8.50%
Avg Cmpd Mkt Growth
IRR (after costs)
10.20%
Outgoings
$86.85/m² p.a.
100%
Terminal Yield
8.75%
Rate/m² NLA
$3,422/m²
Leasing Allowance
6 months downtime, plus 10% incentive, subject to 50%
retention rate.
Income
Area
Capital Expenditure
Ongoing allowance of $15/m² p.a. ($47,336 p.a.)
6.7 years
6.5 years
Tenant Composition by passing income
Browns
Mensware
4%
The Lunch
Room
6%
Spurling Formal
Wear
9% Thai in a Wok
4%
Jasmin
6%
100%
Bradford
College
71%
80%
60%
40%
20%
0%
Current
Yr 2
Yr 4
Future Expiries
Yr 6
Yr 8
Yr 10
Vacant
Comments
•
•
•
The property was on the market for an extended period of time, initially marketed in April 2011.
Income was also derived from the resale of electrics of around $8,000 p.a. which has been capitalised at 20%
The property has a strong retail position with approximately 39% of the total NLA utilised as retail, being located in an area with high foot traffic and in close
proximity to Rundle Mall.
Brisbane Commercial Sales Analysis
Sales Analysis
Sale Analysis
160 Ann Street, Brisbane, Queensland
Sale Date
September 2012
Sale Price
$74,920,000
Vendor
Investa Enhanced Fund (IEF)
Purchaser
CorVal Partners
Description
A 22 level commercial office tower completed in approximately 1972, providing a total Net
Lettable Area (NLA) of 16,060m². The accommodation comprises ground floor retail
accommodation totalling 182m² and office accommodation provided within part of the ground
floor and Levels 1 and 4 to 21 totalling 15,878m². There is additional storage space provided
on Level 22 and 2 levels of car parking for 61 vehicles over Levels 2 and 3.
NABERS Rating
Energy:
3-Star
Water:
4-Star
Land Area
1,821m²
NLA
16,060m²
Parking
61 car parking bays (Levels 2 and 3)
Vacancy
5.1% (827m² of NLA)
No of Tenants
6
Net Passing Income
$7,077,415 per annum
Inputs
Analysis
Market Rentals
Office:
$566/m² of NLA gross (average).
9.43%
Retail:
$600/m² of NLA gross.
Core Market (Equivalent) Yield*
9.06%
Avg Cmpd Mkt Growth
Retail & Office: 2.59% per annum.
IRR (after costs)
9.91%
Outgoings
$1,938,790 per annum ($121/m² of NLA) adopted.
94.4%
Terminal Yield
9.56%
Rate/m² NLA
$4,665/m²
Leasing Allowance
$17,223,097 over 10 years.
Income
Area
Capital Expenditure
$6,471,718 over 10 years.
6.9 years
6.8 years
Dept. Health &
Ageing
15%
Suncorp
31%
Vacant
5%
Retail
1%
CQU
32%
Xstrata
16%
Tenant Composition by NLA
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Secondary Expiries
Primary Expiries
Vacant
Comments
At the time of sale the property had a vacancy rate of 5.1% (827m²) and a WALE (by passing income) of 6.9 years. Notable tenants included Central Queensland University (5,127m²), Suncorp
(4,962m²), Xstrata (2,481m²) and the Department of Health & Ageing (2,481m²). Gross passing office rentals at the time of sale ranged between $556/m² and $772/m² of NLA with gross retail rents of
between $727/m² and $929/m² of NLA.
may be confidential and must not be reproduced or circulated without the written consent of Knight Frank Valuations Queensland.
Knight Frank Valuations Queensland
Sales Analysis
Sale Analysis
144 Montague Road, South Brisbane, Qld
Sale Date
January 2012
Sale Price
$88,050,000
Vendor
Montague Road Property Trust (Empirica)
Purchaser
Hines Global REIT
Description
The property was completed in November 2009 and provides an A-Grade standard of
office accommodation over 6 levels. At the date of sale, the building provided a total
NLA of 14,742m², with 2 basement levels providing car parking for 75 vehicles. There is
an additional 572m² of storage space which has been excluded from our adopted NLA.
The property is awaiting confirmation of a NABERS Energy rating; however we
understand the building has been designed to achieve a 4.5-Star rating.
NABERS Rating
Energy:
Land Area
3,257m²
NLA
14,742m²
Unrated – target of 4.5-Stars
Parking
75 car parking bays
Vacancy
Nil
No of Tenants
1
Net Passing Income
Inputs
Analysis
Market Rentals
Office:
8.61%
Avg Cmpd Mkt Growth
Office: 2.78% per annum
8.37%
Outgoings
$483,452 per annum ($32.79/m² of NLA) adopted
IRR (after costs)
10.09%
Terminal Yield
8.62%
100%
Leasing Allowance
$14,352,699 over 10 years (in year 10)
Rate/m² NLA
$5,973/m²
Capital Expenditure
$5,347,570 over 10 years
Weighted Average Lease
Expiry (Yrs)
Income
Area
$514/m² of NLA gross
9.85 years
9.85 years
Ausenco (sublease to Origin)
38%
Ausenco
62%
100%
80%
60%
40%
20%
0%
Secondary Expiries
Primary Expiries
Vacant
Comments
The building was fully leased to Ausenco at the date of sale with a WALE of approximately 9.85 years. The tenant covenant strength is considered good, however Ausenco have sub-leased 38% of the
building (5,666m²) to Origin Energy. The passing gross office rental was $514/m² of NLA which was considered to be within market parameters at the date of sale. The current outgoings rate of
$32.79/m² of NLA is considerably lower than that of comparable developments; however this reflects the single tenant nature of the property, with the tenant responsible for a number of direct
occupancy expenses. We understand the purchaser had regard to this position in their considerations, with any potential “reversion” in building outgoings deferred until lease expiry. The basement of
the building suffered minor damage in the January 2011 flood, however the damage was rectified prior to the marketing of the building and there was no further price adjustment for this issue.
Sales Analysis
Sale Analysis
12 Creek Street, Brisbane, Queensland
Sale Date
August 2012 (settlement 31 October 2012).
Sale Price
$241,600,000
Vendor
APGF Management Ltd.
Purchaser
Dexus Wholesale Property Limited (50% interest) and Dexus Funds Management
Limited (50% interest).
Description
A landmark, 34 level "A" Grade office tower completed in 1984 and located within the
prime "Golden Triangle" commercial precinct of the Brisbane CBD. The property
provides an NLA of 32,227m², consisting of a prime office tower with 130m² of ground
floor retail accommodation and 31,623m² of office accommodation over 31 upper levels
(with 2 dedicated plant levels on Levels 16 & 33) and an additional 2 level annexe
building comprising an NLA of 474m². Parking is provided for a total of 308 vehicles
over 4 basement levels.
NABERS Rating
Energy:
2.5 Star (however, with planned improvements to at least 3.5 Star).
Water:
4 Star.
Land Area
3,026m².
NLA
32,227m².
Parking
308 vehicles (155 single bays, 153 tandem/multi-format bays).
Vacancy
2.1% (675m²), excluding areas subject to a 12 month rental guarantee.
No of Tenants
Approximately 20.
Net Passing Income
$19,303,937 per annum (excl. year 1 rent abatements).
Inputs
Analysis
Market Face Rentals
Office:
Average $682/m².
Initial Yield (excl. yr 1 rent abatements)
7.92%
Retail:
Average $1,258/m².
7.64%
Avg Cmpd Mkt Growth
3.49% p.a.
IRR (after costs)
9.65%
Outgoings
$3,921,442 p.a. ($121.68/m²).
97.5%
Rate/m² NLA
$7,497/m²
Income
Area
Terminal Yield
7.64%
Leasing Allowance
$44,551,776
incentives).
Capital Expenditure
$13,840,370 over 10 years.
over
10
years
(excl.
outstanding
4.7 years
4.8 years
Vacant/Rent
G'tee
8%
BDO
19%
Other Office
22%
BHP/BMA
17%
City North
Infrastructure
3%
Fisher Adams
Kelly
3%
Thynne &
Macartney Ashley &
Munro
6%
3%
Jardine Lloyd
Thomson
3%
Optus
5%
Mindpearl
3%
Lloyds
International
3%
APGF
4%
Retail
1%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Secondary Expiries
Primary Expiries
Vacant
Comments
The property was purchased for $241,600,000 (excluding GST), with the purchasers (Dexus Wholesale Property Limited and Dexus Funds Management Limited, each with a 50% interest) to assume
responsibility for outstanding incentives at the date of settlement. The contract was finalised in August 2012 with proposed settlement on 31 October 2012. Our analysis has been completed as at the
proposed settlement date, which formed the basis of the purchaser’s pricing calculations. Further, our analysis reflects the purchaser’s treatment of a number of variables within their price
considerations.
Sales Analysis
Sale Analysis
40 Creek Street, Brisbane, Queensland
Sale Date
August 2012
Sale Price
$84,500,000
Vendor
Charter Hall Opportunity Fund No. 5
Purchaser
PGA Group
Description
An 18 level commercial office tower completed in 1983, providing ground floor retail
accommodation totalling 583m² and office accommodation totalling 11,770m² over 3 podium
levels and 14 upper office levels. The building provides a Net Lettable Area (NLA) of 12,353m²
with car parking for 70 vehicles over 2 basement levels. The building underwent a
comprehensive refurbishment and upgrade program in 2008/09, including the upgrade or
replacement of various plant and equipment and the refurbishment and modernisation of the
office accommodation.
NABERS Rating
Energy:
Land Area
1,257m²
NLA
12,353m²
Parking
70 car parking bays
Vacancy
Fully occupied
No of Tenants
26 approximately
Net Passing Income
4-Star (Target)
Inputs
Analysis
Market Rentals
Office:
$601/m² of NLA gross (average).
(at guaranteed minimum year 1 income)
8.28%
Retail:
$891/m² - $2,230/m² of NLA gross.
8.01%
Avg Cmpd Mkt Growth
IRR (after costs)
9.52%
Outgoings
102.1%
Terminal Yield
8.01%
Rate/m² NLA
$6,840/m²
Leasing Allowance
$10,419,734 over 10 years.
Income
Area
Capital Expenditure
$2,144,432 over 10 years.
6.0 years
6.2 years
Other Retail
4%
Santos
10%
Other Office
53%
Whittaker
Macnaught
3%
Kentor Gold
3%
Fitness First
25%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Qcoal
2%
Secondary Expiries
Primary Expiries
Vacant
Comments
At the time of sale the property was fully leased and had a WALE (by passing income) of 6 years. Notable tenants included Fitness First (3,136m²), Santos (1,284m²) and Q Coal (827m²). Gross office
rentals at the time of sale ranged between $545/m² and $865/m² of NLA with gross retail rents of between $891/m² and $2,230/m² of NLA.
Sales Analysis
Sale Analysis
10 Eagle Street, Brisbane, Queensland
Sale Date
June 2012
Sale Price
$195,000,000
Vendor
Brookfield Australia Funds Management Limited
Purchaser
Commonwealth Property Office Fund
Description
The property is situated on an irregular shaped 3,477m² “island” site which has
frontages to Eagle, Charlotte, Market and Mary Streets. The building is located within
the “Golden Triangle” precinct of the Brisbane CBD and has a 4-Star NABERS Energy
rating and 4-Star NABERS Water rating, providing a total NLA of 28,098m² at the time
of sale. The building provides an “A-Grade” standard of office accommodation
comprising ground level foyer and 30 levels of commercial office accommodation, in
addition to dedicated plant rooms on Levels 15 and 16. Ancillary improvements include
basement car parking provisions for 204 vehicles (166 in single bay format and 38
tandem bays). The property also includes a small 2 level annex building providing
374m² of office accommodation, located towards the Mary Street frontage.
NABERS Rating
Energy:
4 Stars
Water:
4 Stars
Land Area
3,477m²
NLA
28,098m²
Parking
204 car parking bays
Vacancy
7.4% (2,081m² of NLA)
No of Tenants
37 (approximately)
Net Passing Income
$14,523,670 per annum
Inputs
Analysis
Market Rentals
Office:
$600/m² - $700/m² of NLA gross.
7.45%
Avg Cmpd Mkt Growth
Office:
3.34% per annum.
7.51%
Outgoings
IRR (after costs)
9.28%
Terminal Yield
8.01%
102.5%
Leasing Allowance
$36,995,156 over 10 years (incl. current incentives).
Rate/m² NLA
$6,940/m²
Capital Expenditure
$23,119,224 over 10 years.
Income
Area
4.22 years
3.87 years
Vacant
7%
PKF Services
10%
Tarong Energy
Corporation
8%
Sparke
Helmore
Solicitors
7%
Adani Mining
5%
Other Office
55%
Idemitsu
Australia
Resources
3%
Talisman
Australia
5%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Secondary Expiries
Primary Expiries
Vacant
Comments
The building was sold with a vacancy rate of approximately 7.4% (2,081m² of NLA) and a WALE (by passing income) of approximately 4.22 years. Notable tenants included PKF Services (2,727m²),
Tarong Energy Corporation (2,170m²) and Sparke Helmore Solicitors (1,820m²). The passing gross office rentals ranged between $440/m² and $969/m² of NLA at the date of sale with a gross market
face rental range of $600/m² to $700/m² of adopted NLA (reflecting an overall average of $664/m² of NLA). The outgoings rate of $140/m² of NLA was considered to be within market parameters and
our analysis reflects a 1.5% ongoing vacancy allowance and adjustments for lease expiry costs and capital expenditure within a 36 month period. The purchaser intended to continue the lift upgrade
program that was underway at the time of sale and also budgeted to refurbish the building’s foyer over the short term. We understand a new 6 year lease to Secure Parking over the basement car
spaces was reflected within the transaction.
Sales Analysis
Sale Analysis
150 Charlotte Street, Brisbane, Queensland
Sale Date
June 2012
Sale Price
$71,000,000 (inclusive of vendor income arrangements)
Vendor
Stockland Trust/Walker Corporation
Purchaser
CIMB TrustCapital Australian Office Fund No. 1
Description
The property is situated on a regular shaped 1,679m² site which has a primary frontage to
Charlotte Street and additional pedestrian access from Elizabeth Street. Recent refurbishment
and upgrade works during 2011/12 were designed to achieve a 4.5-Star NABERS Energy
rating and 4-Star Green Star rating. At the time of sale the building provided a total NLA of
11,035m², comprising ground level foyer with retail accommodation and 16 levels of
commercial office accommodation above. Ancillary improvements included basement car
parking provisions for 110 vehicles (in single bay format), single car wash bay and 80 bicycle
racks with associated amenities and locker facilities.
NABERS Rating
Energy:
Land Area
1,679m²
NLA
11,035m²
Parking
Vacancy
78.2% (8,626m² of NLA). However the building is subject to a minimum net income guarantee.
No of Tenants
4 (currently committed to the building)
Net Passing Income
$6,200,000 per annum (at guaranteed minimum year 1 net income)
4.5-Star (Target)
Inputs
Analysis
Market Rentals
Office:
$595/m² of NLA gross.
(at guaranteed minimum year 1 income)
8.73%
Retail:
$1,000/m² - $1,645/m² of NLA gross.
Avg Cmpd Mkt Growth
8.45%
IRR (after costs)
9.90%
Outgoings
$1,263,956 per annum ($114.54/m² of NLA) adopted.
Rate/m² NLA
$6,434/m²
Terminal Yield
8.95%
Leasing Allowance
$10,017,945 over 10 years.
(excl. vendor guaranteed letting up provisions on current vacancies)
Capital Expenditure
$1,421,875 over 10 years.
Stellarossa
Café
0.4%
Energex
6.2%
Tenant Composition by Income - Market
DFAT
13.5%
Walker
Corporation
1.7%
Stellarossa
Café
1%
Energex
5%
DFAT
12%
Walker
Corporation
2%
Car Parking
10%
Vacant
78.2%
Vacant
70%
Comments
At the date of sale, 78.2% (8,626m² of NLA) of the building was uncommitted, following the relocation of Energex and subsequent refurbishment of the building in 2011/12. Under the terms of the
purchase agreement the vendor was responsible for lease up services and rental guarantee provisions over uncommitted space. The proposed lease terms for vacancies forming part of the lease up
services included a minimum commencing gross face rental of $595/m² of NLA, minimum lease duration of 5 years and maximum tenant incentive of 25% of the proposed lease term. The vendor was
liable for all leasing and incentive costs associated with securing tenants for the vacant areas, including where incentives required to secure tenants exceeded the nominated target incentive of 25%.
The agreed terms also included a 5 year initial income guarantee provision, which guaranteed a minimum net income of $6,200,000 in year 1 increasing by 4% per annum. Existing tenants included
Energex (686m²) and the Department of Foreign Affairs and Trade (1,492m²). A 2% ongoing vacancy allowance was adopted within our analysis. The total purchase price of $71 million was
apportioned by the parties as $56 million for the “property” component and an additional $15 million for the vendor guarantee provisions. As all letting up and vacancy costs for vacancies were to be
paid by the vendor, an analysis excluding these provisions would result in an equivalent yield generally in line with that indicated above.
Sales Analysis
Sale Analysis
215 Adelaide Street, Brisbane, Qld
Sale Date
March 2012
Sale Price
$134,500,000
Vendor
South Hooke Pty Ltd (GIC Real Estate Pte Ltd)
Purchaser
215 Adelaide Pty Ltd (Pramerica)
Description
The property is situated on an irregular 2,838m² site which has frontages to Adelaide
and Edwards Streets and consists of 3 components; 215 Adelaide Street (office tower),
Rowes Arcade and Rowes Building (located in the Brisbane City Council Heritage Place
Code). The property has a 4.5-Star NABERS Energy rating and provides a total NLA of
29,780m² within the 3 components. The office tower comprises 2 podium levels of retail
accommodation with 28 levels of commercial office accommodation above, with Rowes
Arcade connecting to the podium level retail component and Post Office Square and
Edward Street via a pedestrian access way. Rowes Building also provides multiple
levels of office accommodation but of an older standard. At the time of sale the property
provided car parking for 141 vehicles.
NABERS Rating
Energy:
Land Area
2,838m²
NLA
29,780m²
Parking
Vacancy
12.69% (3,779m² of NLA)
No of Tenants
70 (approximately)
Net Passing Income
$10,919,010 per annum
4.5 Stars
Inputs
Analysis
Market Rentals
Office:
$300/m² - $550/m² of NLA gross.
8.12%
Retail:
$370/m² - $2,053/m² of NLA gross.
8.90%
Avg Cmpd Mkt Growth
IRR (after costs)
10.17%
Outgoings
$3,631,611 per annum ($121.95/m² of NLA) adopted.
103.3%
Terminal Yield
9.40%
Rate/m² NLA
$4,516/m²
Leasing Allowance
$37,284,509 over 10 years.
Income
Area
Capital Expenditure
$12,433,072 over 10 years.
4.40 years
4.16 years
Vacant Retail
1%
100%
DEEWR
17%
CSG International
9%
Santos Ltd
10%
Vacant Office
12%
Retail
9%
80%
60%
40%
20%
0%
Other Office
40%
Colleges Australia
International
2%
Secondary Expiries
Primary Expiries
Vacant
Comments
The building had a vacancy rate of 12.69% (3,779m² of NLA) at the date of sale and reflected a WALE by passing income of approximately 4.4 years. Overall the tenant covenant strength was sound,
with tenants including the Department of Education, Employment, and Workplace Relations (5,048m²), Santos Ltd (2,856m²) and CSG International (2,726m²). The passing office gross rentals ranged
from $322/m² to $745/m² of NLA and the passing retail gross rentals ranged from $370/m² to $2,053/m² of NLA at the date of sale. A 2% ongoing vacancy allowance was adopted and capital
adjustments for expiries within a 36 month period have been accounted for within the analysis.
Perth Commercial Sales Analysis
Sales Analysis
Sales Analysis
Optima Centre, 16 Parkland Road, Osborne Park, WA
Sale Date
October 2012
Sale Price
$105,670,000 exclusive of GST
Vendor
ABN Group and Macquarie Real Estate Capital
Purchaser
MGPA Asien Spezialfonds
Description
The property consists of two modern, freestanding, office buildings located in the suburb
of Osborne Park approximately 8 kilometres north west of the Perth CBD within the
Herdsman Business Park precinct.
Building A is the smaller of the two office buildings and comprises modern
improvements which present to a high standard. This building is located to the northern
side of the site fronting Hasler Road and has a net lettable area of 2,611m² over three
levels. This building is occupied by ABN Group and Canon Australia.
Building B is over six levels comprising similar, modern improvements and is located on
the corner of the Parkland Road and Hasler Road intersection. This building has a net
lettable area of 13,339m² and is fully leased to the Western Australian Government with
a 167m² Aroma Café at ground level.
Land Area
9,459m²
NLA
16,116m
Parking
511 car bays (comprising 500 secure tenant bays and 11 visitor bays)
NABERS
4.5 star (Energy)
Vacancy
Nil
No of Tenants
4 – Western Australian Government (13,339m²), ABN Group (1,419m²),
Australia (1,191m²) and Aroma Cafe (167m²)
Net Passing Income
$9,172,636 per annum (Passing office rent $506/m )
2
Canon
2
Inputs
Analysis
8.68%
2
Office: $460/m
Café: $400/m²
Car Bays: $175 per bay pcm
Market Rentals
Core Market Yield*
8.20%
Avg Cmpd Mkt Growth
3.4%
IRR (after costs)
9.86%
Outgoings
$1,563,027 per annum (Average Rate: $96.99/m )
108.3%
Terminal Yield
9.0%
Rate/m² NLA
$6,557/m²
Leasing Allowance
5 year term with 6 months letting up and 6 months
rental incentive
Income
Capital Expenditure
Ongoing Capex: $177,276 per annum ($11/m² pa)
increased by CPI.
2
11.9 years
100%
80%
Office
88%
Other
0%
60%
40%
20%
Parking
11%
0%
Retail
1%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments

The property was sold in an off market transaction following a marketing campaign in mid 2010.

The lease to the Western Australia Government expires in October 2025 while the leases for ABN Group and Canon Australia are both due to expire May 2019.
Sales Analysis
Sales Analysis
45 St Georges Terrace, Perth WA
Sale Date
September 2012
Sale Price
Vendor
Stockland
Purchaser
Credit Suisse
Description
The property is a ‘B’ grade office development completed in 1972 and most recently
refurbished in 1995 with 9 levels of office accommodation with a typical floor plate of
1,086m² and 34 car bays at basement level and 739.6m² of storage at lower basement
level.
The property is well located along the southern side of St Georges Terrace midway
between Barrack Street and Sherwood Court.
The ground floor lobby contains a centrally located café tenancy.
NABERS Rating
Energy:
Land Area
1,827m²
2.5 Stars
NLA
10,017.8m²
Parking
34 car bays
Vacancy
Nil
No of Tenants
11 – Major tenants include: Worley Parsons (5,945.8m²), Amcom (1,096.0m²),
Computershare Investor Services (765.4m²), SIIWA (511.8m²) and Sentinel
Stockbrocking (410.9m²).
Net Passing Income
$5,856,026 per annum (Average passing office rent $560/m pa net)
2
Inputs
Analysis
Market Rentals (net)
2
Office: $475/m - $510/m² (Average: $491/m²)
10.5%
Core Market Yield*
9.0%
Car Park: $750 pb pcm
Avg Cmpd Mkt Growth
3.5%
IRR (after costs)
10.0%
Outgoings
$1,451,243 per annum ($144.87/m )
106.0%
Terminal Yield
9.75%
Rate/m² NLA
$5,515/m²
Leasing Allowance
5 year term with 6 months down time and 10% rental
incentive and 50% retention rate
Income
Area
Capital Expenditure
Ongoing Capex: $250,000 per annum ($25/m2) increased by CPI
2
2.0 years
2.0 years
100%
Office
87%
80%
60%
Other
8%
40%
Parking
4%
20%
Retail
1%
0%
Current
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments

We understand that the purchaser is also paying an amount of $300,000 to cover outstanding incentives in addition to the purchase price.

The property currently derives an electricity profit of $180,000 per annum which has been capitalised at a rate of 20% in the above analysis.
Sales Analysis
Sales Analysis
130 Fauntleroy Avenue, Redcliffe, WA
Sale Date
September 2012 – Under Contract
Sale Price
Vendor
Private Investor
Purchaser
Private Investor
Description
The property comprises two modern, freestanding, two level office buildings and two
warehouses located in the suburb of Redcliffe approximately 12 kilometres north east of
the Perth CBD in the commercial hub adjacent to the Perth Domestic Airport.
The larger of the two office buildings comprises modern improvements which present to
a high standard and is located towards the corner of Henderson Avenue and Fauntleroy
Avenue. This building has a net lettable area of 5,000.7m².
The second office building is also over two levels comprising similar modern
improvements and benefits from undercroft parking to the corner of Kleinig Road and
Fauntleroy Avenue. This building has a net lettable area of 1,461.2m² and is fully leased
to the Civil Aviation Safety Authority.
The two freestanding warehouse buildings have a combined net lettable area of
2,520.3m² and access is provided via Kleinig Road.
Land Area
19,302m²
NLA
8,982.2m2
Parking
201 car bays
NABERS
2.0 star (Energy)
Vacancy
Nil
No of Tenants
8 – Major tenants include Downer (2,502.3m²), CASA (1,461.2m²), Austmail (1,400m²),
Bristlow Helicopters (1,262.3m²), Recall (1,120.3m²) and Byrnecut Mining (787.3m²)
Net Passing Income
$2,140,478 per annum (Passing office rent $286/m2, passing warehouse rent $114/m² )
Inputs
Analysis
Market Rentals
Office: $350/m2
Industrial: Office: $180/m², Warehouse: $90/m²
8.73%
Core Market Yield*
10.26%
Avg Cmpd Mkt Growth
3.0%
IRR (after costs)
10.68%
Outgoings
$817,816 per annum (Average Rate: $91.05/m2)
78.9%
Terminal Yield
9.0%
Rate/m² NLA
$2,730/m²
Leasing Allowance
rental incentive
Income
Area
Capital Expenditure
Immediate Capex: $14,861 in 2012/13
Ongoing Capex: $100,000 per annum ($11/m² pa)
increased by CPI.
2.3 years
2.2 years
Other
1%
100%
Office
96%
Parking
2%
80%
60%
40%
20%
0%
Retail
1%
Current
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments
x
The property is due to settle in mid-October.
x
The property derives an electricity profit of $25,000 per annum which we have capitalised at a rate of 20% in our analysis.
Sales Analysis
Sales Analysis
Sale Date
September 2012
Sale Price
Vendor
Private Investor
Purchaser
Undisclosed
Description
The property is a modern ‘A’ grade office building constructed in 1983 and refurbished
in 1989 with 8 levels of office accommodation and a typical floor plate circa 640m².
There is basement car parking providing 20 bays.
The building is approximately 100 metres east of the intersection of St Georges Terrace,
Mount Street and Milligan Street toward the western entrance of the Perth CBD.
NABERS Rating
Energy:
Land Area
1,166m²
1.5 Stars
NLA
4,674m²
Parking
20 car bays
Vacancy
5.5% (255.1m²)
No of Tenants
12 – Major tenants include: BHP Billiton (1,246m²), Dimension Data (643.2m²),
Minerlology (346.3m²), Theiss (345.3m²) and Westpac (338.7m²)
Net Passing Income
$2,836,517 per annum (Average office rent $553/m )
2
Inputs
Analysis
Market Rentals
2
Office: $525/m - $575/m²
9.62%
Core Market Yield*
9.15%
Retail: $1,250/m²
Car Bays: $750 pb pcm
Avg Cmpd Mkt Growth
3.5%
IRR (after costs)
9.81%
Outgoings
$716,793 per annum ($153.34/m )
105.0%
Terminal Yield
9.5%
Rate/m² NLA
$6,311/m²
Leasing Allowance
rental incentive
Income
Area
Capital Expenditure
Immediate Capex: $500,000
Ongoing Capex: $100,000 per annum ($21/m2)
2
2.2 years
1.9 years
Office
83%
Parking
4%
100%
80%
60%
40%
20%
Other
2%
0%
Current
Retail
11%
Yr 2
Vacant
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
Comments

New leases have been agreed with Savcorp (commencing January 2013) and NES Global (commencing November 2012) at starting rents of $550/m² on part
Levels 2 & 3. These leases will be commencing immediately following the expiry of existing leases and have been included in the above analysis.


An allowance of $500,000 has been made for immediate capex items plus an additional $425,596 in 2014.
Sales Analysis
Sales Analysis
Sale Date
July 2012
Sale Price
Vendor
AMP Capital Investors
Purchaser
Investa Office Fund
Description
The property is a modern 'A' grade office development completed in 1990 with 15 levels
2
of office accommodation with a typical floor place of 1,006.9m and 66 car bays over the
ground and basement levels.
The building occupies a well located position on the northern side of St Georges
Terrace between William Street and Barrack Street and opposite Sherwood Court.
The ground and mezzanine levels are occupied by retail tenancies including a florist,
coffee shop and Australia Post.
NABERS Rating
Energy:
Land Area
2,510m²
3.0 Stars
NLA
11,445.80m²
Parking
66 single and tandem car bays
Vacancy
Nil
No of Tenants
11 – Major tenants include: Manpower Services (2,412m²), ASIC (2,377.2m²), Suncorp
Corporate Services (2,322.4m²), Subsea 7 Contracting (2,013.1m²), AMEC Engineering
(1,006.2m²) and Australia Post (321.8m²)
Net Passing Income
$7,207,935 per annum (Average passing office rent $558/m pa net)
2
Inputs
Analysis
2
Market Rentals
Office: $585/m - $625/m²
8.75%
Core Market Yield*
8.71%
IRR (after costs)
10.04%
Retail: $575/m² - $1,890/m²
Avg Cmpd Mkt Growth
4.0%
2
Outgoings
$1,804,304 per annum ($157.64/m )
94.1%
Terminal Yield
8.75%
Rate/m² NLA
$7,197/m²
Leasing Allowance
5 year term with 12 months down time and 10% rental
incentive and 50% retention rate
Income
Area
Capital Expenditure
Ongoing Capex: $265,000 per annum ($23/m2) increased by CPI
1.7 years
1.7 years
Office
86%
Other
1%
Parking
8%
Retail
5%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Yr 4
Vacant
Yr 6
Yr 8
Yr 10
Future Expiries
Comments


The property has undergone recent capital expenditure upgrades to the BMS and mechanical services to the value of $1.3 million, which has increased the
NABERS Energy Rating from 1.5 stars to 3 stars.

There are outstanding incentives to ASIC and Suncorp however the incentives have been excluded from the transaction.
Sales Analysis
Sales Analysis
255 & 267 St Georges Terrace, Perth WA
Sale Date
July 2012
Sale Price
Vendor
Stockland Trust
Purchaser
Primewest
Description
Two low-rise CBD office buildings being 255 St Georges Terrace (constructed in 1987)
and 267 St Georges Terrace (constructed in 1981). 255 St Georges Terrace comprises
two levels of modern office accommodation with a central atrium and 48 basement car
bays. 267 St Georges Terrace comprises four levels of modern office accommodation
with a typical floor plate of 950m² and 38 basement car bays.
The property is well located on St Georges Terrace being approximately 100 metres
west of the intersection with Milligan and Mount Streets. The property also benefits from
an elevated position providing an outlook to the Swan River and Kings Park.
NABERS Rating
Energy:
255 St Georges Terrace – 1.5 Stars
Land Area
2,486m2 (255 St Georges Tce - 697m², 267 St Georges Tce – 1,789m²)
NLA
4,131.3m2 (255 St Georges Tce – 625m², 267 St Georges Tce – 3,506.3m²)
Parking
86 car bays (255 St Georges Tce – 48 car bays, 267 St Georges Tce – 38 car bays)
Vacancy
Nil
No of Tenants
5 – ProMet Engineers (18.5% of total NLA), ASG (22.8% of total NLA), Advanced Well
Technologies (23.0% of total NLA), Regus (20.5% of total NLA), Allseas Construction
Contractors (15.1% of total NLA)
Net Passing Income
$2,504,784 per annum (Average office rent $515/m
267 St Georges Terrace – 2.5 Stars
)
2
Inputs
Market Rentals
Analysis
Office: $475-$500/m
2
9.38%
Core Market Yield*
10.07%
Avg Cmpd Mkt Growth
3.75%
IRR (after costs)
11.08%
Outgoings
$656,647 per annum ($158.94/m )
101.0%
Terminal Yield
9.5%
Rate/m² NLA
$6,463/m²
Leasing Allowance
rental incentive
Income
Area
Capital Expenditure
2
2.6 years
3.1 years
Comments
x
At the time of sale, there were 39 vacant car bays on site which were not subject to any licence agreement.
x
x
An allowance of $600,000 has been made for immediate capex items.
Sales Analysis
Sales Analysis
1 Adelaide Terrace, Perth WA
Sale Date
June 2012
Sale Price
Vendor
Fortius Funds Management
Purchaser
GDI Property Group
Description
A seven level ‘A’ grade office building constructed in 1987 with office floor plates
ranging in size from 1,600m² to 3,300m² and secure basement parking for 176 vehicles.
There is also a 200m² café located on Level 2.
The property is well located on Adelaide Terrace being approximately 150 metres west
of the intersection with Riverside Drive at the eastern entrance to the Perth CBD. The
building has a distinctive semi-circular design with a full height central atrium. The roof
of the atrium is glazed for natural light and also assists lighting of the office floors.
NABERS Rating
Energy: 3.5 star
Land Area
6,540m
NLA
19,825m
Parking
176 car bays (118 single, 46 tandem and 12 motorcycle)
Vacancy
3.6% (710.5m²)
No of Tenants
6 – Minister for Works (33% of NLA), Lycopodium Engineering (30% of NLA), Worley
Parsons (20% of NLA), Sandvik Mining (7% of NLA), Amcom (6% of NLA), D Café (1%
of NLA)
Net Passing Income
$10,109,707 per annum (Average office rent $457/m )
2
2
2
Inputs
Analysis
2
9.86%
Core Market Yield*
9.74%
3.25%
IRR (after costs)
10.24%
Market Rentals
Office: $450 - $475/m
Avg Cmpd Mkt Growth
2
Outgoings
$2,508,670 per annum ($126.54/m )
102.3%
Terminal Yield
10.0%
Rate/m² NLA
$5,173/m²
Leasing Allowance
rental incentive
Income
Area
Capital Expenditure
Immediate Capex: $3,500,000
4.8 years
4.9 years
Comments

At the time of sale, there were 28 vacant parking bays on site, comprising 2 single car bays, 20 tandem car bays and 6 motorcycle bays which were not subject
to any licence agreement.

The property currently derives an electricity profit of $450,000 per annum and after hours air-conditioning income of $266,300 per annum, both of which have
been capitalised at a rate of 20% in the above analysis.

An allowance of $3,500,000 has been made for immediate capex items.
Sales Analysis
Sales Analysis
10 Ord Street, West Perth WA
Sale Date
June 2012
Sale Price
Vendor
Private Investor
Purchaser
Private Investor
Description
A three level ‘B’ grade office building constructed in 1988 with the office
accommodation over three levels comprising a net lettable area of 1,958m2 and
the lower ground level providing basement car parking for 45 vehicles.
The property occupies a prominent position on the corner of Ord Street and
Emerald Terrace, with access from Emerald Terrace only and egress possible to
both streets.
The property is of modern construction, comprising reinforced concrete floor
plates and external walls consisting of a combination of painted masonry and precast concrete clad panels and glazed frontages.
Land Area
1,370m2
NLA
1,958m2
Parking
45 car bays
Vacancy
Nil
No of Tenants
3 – Strike Energy Ltd (30% of NLA), Apex Minerals (34% of NLA), Lend Lease (36% of
NLA)
Net Passing Income
$1,132,845 per annum (Average office rent $484/m2)
Inputs
Market Rentals
Analysis
2
Office: $525/m
8.34%
Car Bays: $350 per bay pcm undercover, $330 per bay
pcm open
Core Market Yield*
8.92%
Avg Cmpd Mkt Growth
3.75%
IRR (after costs)
9.70%
Outgoings
$329,169 per annum ($168.12/m2)
92.3%
Terminal Yield
9.0%
Rate/m² NLA
$6,936/m²
Leasing Allowance
rental incentive
Income
Area
Capital Expenditure
3.2 years
3.2 years
Comments
x
The property was sold in an off market transaction.
x
The building does not have a NABERS Energy Rating as it is under the 2,000m² net lettable area threshold requiring mandatory disclosure.
Sales Analysis
Sales Analysis
Sale Date
June 2012
Sale Price
$96,000,000 exclusive of GST (50% share)
Vendor
Wyllie Group
Purchaser
Charter Hall
Description
The property is a modern ‘A’ grade office building constructed in 1989 with 20 levels of
office accommodation with a typical floor plate circa 1,200m², plus 3 levels of basement
car parking providing 373 bays.
The building occupies a high profile position near the intersection of St Georges Terrace
and Mount Street at the western entrance of the Perth CBD.
The site is held on a leasehold from The Perth Diocesan Trustees for a term of 99
years, which commenced in 1986 and will expire in November 2085. There is not any
ground rental payment.
NABERS Rating
Energy:
Land Area
4,779m²
3.0 Stars
NLA
21,221m²
Parking
373 car bays
Vacancy
Nil
No of Tenants
22 – Major tenants include: BHP Billiton (13,919.8m²), Bendigo Bank (1,454.1m²),
Minister for Works (875.9m²), Hemisphere Corporate Services (489.5m²) and Wyllie
Group (365.7m²)
Net Passing Income
$17,607,827 per annum (Average office rent $686/m2)
Inputs
Market Rentals
Analysis
2
Office: $635/m - $725/m²
9.17%
Core Market Yield*
9.00%
Avg Cmpd Mkt Growth
3.50%
IRR (after costs)
9.85%
Outgoings
$2,885,145 per annum ($135.96/m2)
101.5%
Terminal Yield
9.0%
Rate/m² NLA
$9,048/m²
Leasing Allowance
rental incentive
Income
Area
Capital Expenditure
Immediate Capex: $2,215,000
3.3 years
3.0 years
Comments
x
The sale of the half share of the leasehold of the property was conducted in an off market transaction from Wyllie Group to Charter Hall, who already owned the
remaining 50% share, and subsequently became the sole owner of the leasehold.
x
x
An allowance of $2,215,000 has been made for immediate capex items.
Melbourne Commercial Sales Analysis
Sales Analysis
40 Market Street, Melbourne
Sale Date
Sale Price
Vendor
Purchaser
Description
January 2013
$46,700,000
Entrust Funds Management
Dexus Property Group
1988 constructed 9 level office building comprising ground floor
retail and basement car parking for 85 vehicles. 100% leased to
Powercor Australia Ltd, located in the Western Core of the CBD.
Site Area
NLA
2,309 m2
Office
11,599.6 m²
Retail
300.1 m²
Total
11,899.7 m²
85 car bays
0.0%
1
Powercor Australia Ltd
$4,144,207
Parking
Vacancy
No. of Tenants
Major Tenant
Net Passing Income
Insert Photo
Inputs
Analysis
Office
$460/m² pa
8.9%
Retail
$500/m² pa
Core Market Yield
8.4%
Average 10 yr Compound
Rental Growth
Office
3.9%
10.3%
Retail
3.4%
Rate/m² of NLA
$3,924/m²
Outgoings
Terminal Yield
$100/m² pa
$100/m
9.00%
Income
Area
6.0 yrs
6.0 yrs
Average 10 yr
Leasing allowances
(before renewal/retention
assumptions)
Office
Income
Area
6.0 yrs
6.0 yrs
Retention Assumptions
Office
Retail
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
17.5%
7 mths
8.0%
6 mths
0.0 yrs
0%
50%
At Expiry
$150/m²
Sinking Fund $1/m² pa
% of Value
17.3%
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been
adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
Passing Income by Component
Office
85%
Other
3%
Comments
Parking
9%
Retail
3%
%ofNetLettableArea
Capital Expenditure
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
Nine level B - grade office building 100% leased to Powercor Australia Ltd. Provides typical floor plate of 1,270 sq.m. with good natural light and central core design,
with basement storage of 557 sq.m. The sale followed a successful EOI campaign in August 2012. Our analysis includes capex in the order of $10 million (in
addition to capex at expiries and sinking fund) to reposition the building following expiry of the Powercor lease.
The above information is purely for the purpose of a broad guide and whilst we understand the facts to be generally reliable we are unable to guarantee their accuracy. The
Sales Analysis
436 Johnston Street, Abbotsford
Sale Date
Sale Price
Vendor
Purchaser
Description
February 2013
$32,000,000
Opus Capital Limited
Prime Value
Constructed 2009, comprising ground floor showrooms and café
with 4 upper levels of office accommodation and on-site parking
via an attached 3 level car parking station. Situated to the corner
of Johnston Street and Trenerry Crescent, approximately 4
kilometres north-east of the Melbourne CBD.
Site Area
NLA
4,826m2
Office
9,080.5 m²
Retail
1,036.0 m²
Total
10,116.5 m²
285 car spaces
23.0%
4
Glaxo Smith Kline and Ingram Micro
$2,738,837
Parking
Vacancy
No. of Tenants
Major Tenants
Net Passing Income
Inputs
Insert Photo
Analysis
Office
$380/m² pa
8.6%
Retail
$381/m² pa
Core Market Yield
10.1%
Rental Growth
Office
2.6%
11.4%
Retail
3.6%
Rate/m² of NLA
$3,163/m²
Outgoings
Terminal Yield
$76/m² pa
$76/m
9.50%
Income
Area
2.2 yrs
2.2 yrs
Average 10 yr
Leasing allowances
assumptions)
Office
Income
Area
2.8 yrs
2.2 yrs
Office
Retail
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
15.0%
7 mths
5.5%
7 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$150/m²
% of Value
3.3%
TrenerryCafé
2%
Comments
GlaxoSmith
Kline
55%
%ofNetLettableArea
IngramMicro
22%
Kodak
21%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
Modern 2009 constructed five level retail and office building (4 Star Green Star Rating), with on-site parking for 285 cars provided via attached three level car
parking station. L - shape floor plates providing good natural light. Vacancy at sale 23% by area. Sold following EOI campaign in December 2012.
Sales Analysis
332 St Kilda Road, Melbourne
Sale Date
Sale Price
Vendor
Purchaser
Description
December 2012
$18,600,000
Overland Properties
Private Investor
7 level office building, with 3 levels of basement car parking for
67 vehicles, constructed in 1982 providing typical floorplates of
780m2. Office space 100% leased to Homesglen Institute of
TAFE. Situated to the western side of St Kilda Road, directly
opposite the Shrine of Remembrance and Royal Botanic
Gardens, less than 1.5 kilometres to the Melbourne CBD.
Site Area
NLA
957 m2
Office
5,417.9 m²
Retail
0.0 m²
Total
5,417.9 m²
67 car spaces
0.0%
1
Holmesglen Institute of TAFE
$1,485,261
Parking
Vacancy
No. of Tenants
Major Tenants
Net Passing Income
Inputs
Analysis
Office
$365/m² pa
8.0%
Retail
$0/m² pa
Core Market Yield
8.8%
Rental Growth
Office
2.6%
7.6%
Retail
3.6%
Rate/m² of NLA
$3,433/m²
Outgoings
Terminal Yield
$95/m² pa
9.00%
Income
Area
4.3 yrs
4.6 yrs
Average 10 yr
Leasing allowances
assumptions)
Office
Income
Area
4.6 yrs
4.6 yrs
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
15.0%
6 mths
5.5%
3 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$150/m²
% of Value
3.6%
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has
been adjusted to account for property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies,
incentives, etc).
Income Composition by Passing Income
Parking
2%
Comments
%ofNetLettableArea
Office
98%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
A well positioned 1980s office building offering conventional office accommodation. Typical floor plates of 780m2 with excellent natural light. Office space 100%
leased to Homesglen Institute of TAFE who carried out their own refurbishment in 2011/2012, with significant works to levels ground, 1, 2, 4 and part 6. Sold
following a successful EOI campaign in November 2012. Corner site with high underlying land value suggesting that the sale was not IRR driven.
Sales Analysis
370 Docklands Drive, Docklands
Sale Date
Sale Price
Vendor
Purchaser
Description
December 2012
$38,500,000
YarraCorp Developments Pty Ltd
Private Investor
2008 constructed A - grade seven level office building with
environmentally sustainable features providing views across city
skyline and secure above ground car parking for 140 vehicles.
Situated to the high profile corner of Docklands Drive and
Footscray Road.
Site Area
NLA
2,800m2
Office
Retail
Total
140 car bays
0.0%
2
Kaplan Carrick
$3,128,533
Parking
Vacancy
No. of Tenants
Major Tenants
Net Passing Income
Insert Photo
7,013.0 m²
116.0 m²
7,129.0 m²
Inputs
Analysis
Office
$466/m² pa
8.1%
Retail
$646/m² pa
Core Market Yield
8.1%
Rental Growth
Office
3.9%
9.4%
Retail
3.6%
Rate/m² of NLA
$5,400/m²
Outgoings
Terminal Yield
$71/m² pa
8.75%
Income
Area
8.2 yrs
8.4 yrs
Average 10 yr
Leasing allowances
assumptions)
Office
Income
Area
8.2 yrs
8.4 yrs
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
17.5%
7 mths
5.0%
6 mths
0.0 yrs
0%
0%
Capital Expenditure
At Expiry
$150/m²
% of Value
1.7%
incentives, etc).
%ofNetLettableArea
KaplanCarrick
PtyLtd
94%
YarraParking
6%
Comments
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
Environmentally sustainable office building (5 Star Greenstar rating by design) over seven levels with a secure cover above ground car park for 140 vehicles.
100% leased with Kaplan Carrick occupying the entire office component plus 10 car bays and Yarra Parking leasing the remainder 130 car bays. The sale
followed a successful EOI campaign in October 2012.
Sales Analysis
533 Little Lonsdale Street, Melbourne
Sale Date
Sale Price
Vendor
Purchaser
Description
December 2012
$19,500,000
Trilogy Funds Management Limited
Local Private Syndicate
1990s 12 level strata titled office building with 47 basement car
parks. The building is strata titled on a whole floor and individual
car space basis, but held 'in one line'. Located in the western
sector of the CBD between William and King Streets in close
proximity to the major Courts. Floor plates are circa 550m2 with
side services core and good natural light to three sides.
Site Area
NLA
Parent title - 910 m2
Office
6,598.5 m²
Retail
0.0 m²
Total
6,598.5 m²
47 car bays
16.3%
12
Parking
Vacancy
No. of Tenants
Major Tenants
Insert Photo
Barristers Chambers Limited and Kelly Hazell Lawyers Pty Ltd
Net Passing Income
$1,495,367
Inputs
Analysis
Office
$364/m² pa
7.7%
Retail
$0/m² pa
Core Market Yield
8.7%
3.9%
9.8%
3.6%
Rate/m² of NLA
$2,955/m²
Income
Area
2.7 yrs
2.8 yrs
Income
Area
3.2 yrs
2.8 yrs
Rental Growth
Office
Outgoings
Terminal Yield
$91/m² pa
9.00%
Average 10 yr
Leasing allowances
assumptions)
Office
Retail
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
17.5%
6 mths
5.5%
7 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$150/m²
% of Value
10.9%
Barristers
Chambers
18%
Comments
RCNT
Administrative
Services
11%
KellyHazzell
Lawyers
12%
%ofNetLettableArea
CaasonGroup
11%
Other
48%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
Conventional B grade office building with the benefit of existing strata title on a floor by floor basis. Leased on both a whole floor and half floor basis to a mix of legal
related and commercial tenants and was circa 16% vacant at sale. The building is original to construction and our analysis provides for $1.5 million capex to plant
& equipment upgrade. The purchaser is a local private syndicate.
Sales Analysis
555 Lonsdale Street, Melbourne
Sale Date
Sale Price
Vendor
Purchaser
Description
December 2012
$57,500,000
BlackRock Investment Management (Australia) Ltd
LaSalle Australia Core Plus Fund
Marsh Centre, formerly Sedgwick House. Constructed 1989,
comprising a 16 level A - grade office building with 12 upper
levels of office, 2 level basement car parking for 76 vehicles
and top level two bedroom penthouse. Situated to the Western
Core of the Melbourne CBD, within the legal district.
Site Area
NLA
1,849 m2
Office
15,130.0 m²
Retail
1,045.0 m²
Total
16,175.0 m²
76 car bays
0.0%
11
Monash University, Marsh and Barristers Chambers
$5,846,894
Parking
Vacancy
No. of Tenants
Major Tenants
Net Passing Income
Inputs
Analysis
Office
$435/m² pa
10.2%
Retail
$480/m² pa
Core Market Yield
9.1%
Rental Growth
Office
3.9%
10.1%
Retail
3.4%
Rate/m² of NLA
$3,555/m²
Outgoings
Terminal Yield
$85/m² pa
9.25%
Income
Area
3.9 yrs
4.0 yrs
Average 10 yr
Leasing allowances
assumptions)
Office
Income
Area
4.0 yrs
4.0 yrs
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
17.5%
7 mths
8.0%
6 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$250/m²
% of Value
10.0%
incentives, etc).
Monash
University
16%
Barristers
Chambers
16%
%ofNetLettableArea
Marsh
41%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other
27%
Comments
FutureExpiries
Vacant
A well positioned 1989 office building offering conventional A-Grade office accommodation. 4-star NABERS Energy rating. Typical floor plates of 1,305m2 with
excellent natural light and views over the city and Docklands. Sold following a successful EOI campaign in November 2012.
Sales Analysis
333 Exhibition Street, Melbourne
Sale Date
Sale Price
Vendor
Purchaser
Description
Site Area
NLA
Parking
Vacancy
No. of Tenants
Major Tenant
Net Passing Income
November 2012
$22,000,000
Quintessential Equities
Overseas Private Investor
1986 built strata office and carpark, forming part of the Mantra
Suite Hotel. Sale property comprised a ground floor showroom
(525 m2) and 5 upper levels of B grade offices with 1,200 m2
floors (6003 m2) fully let to Telstra. The building occupies the
corner of Latrobe and Exhibition Street and enjoys excellent
natural light.
Strata
Office
6,528.0 m²
Retail
0.0 m²
Total
6,528.0 m²
Separate licence in adjoining premises.
0.0%
1
Telstra
$1,909,209
Inputs
Insert Photo
Analysis
Office
$367/m² pa
8.7%
Retail
$0/m² pa
Core Market Yield
8.7%
Rental Growth
Office
3.9%
7.4%
Retail
3.6%
Rate/m² of NLA
$3,370/m²
Outgoings
Terminal Yield
$74/m² pa
9.00%
Income
Area
3.5 yrs
3.5 yrs
Average 10 yr
Leasing allowances
assumptions)
Office
Income
Area
3.5 yrs
3.5 yrs
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
17.5%
7 mths
5.5%
7 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$150/m²
% of Value
11.7%
incentives, etc).
%ofNetLettableArea
Telstra
100%
Comments
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
B grade strata office investment located on a prominent corner in the north western core of the CBD, fringing into Carlton. Significant expiry risk associated
with Telstra. Telstra recently exercised a further 3 year option commencing in May, 2013 at market rental levels. The premises will require a refit once Telstra
vacate, with no make good and a long term occupancy. Sold after an EOI campaign in late 2012 to an overseas private investor.
Sales Analysis
601 Bourke Street, Melbourne
Sale Date
Sale Price
Vendor
Purchaser
Description
Site Area
NLA
Parking
Vacancy
No. of Tenants
Major Tenants
Net Passing Income
December 2012
$29,100,000
Centuria Property Trust
Overseas Investor
Allianz Centre, formerly Forestry House. 11 level office building
located to the corner of Bourke and King Streets. 1970s
construction and underwent a full shell and core refurbishement
in early 2000s. Conventional B grade building with circa 780m2
floor plates with natural light to three sides. 1.5 star NABERS
energy rating.
910 m2
Office
7,680.1 m²
Retail
299.5 m²
Total
7,979.6 m²
26 car bays
4.7%
9
CGU Insurance Limited and AGL Limited
$2,578,786
Inputs
Insert Photo
Analysis
Office
$421/m² pa
8.9%
Retail
$576/m² pa
Core Market Yield
9.1%
Office
3.9%
10.3%
3.4%
Rate/m² of NLA
$3,647/m²
Income
Area
3.1 yrs
3.2 yrs
Income
Area
3.4 yrs
3.2 yrs
Rental Growth
Retail
Outgoings
Terminal Yield
$89/m² pa
9.50%
Average 10 yr
Leasing allowances
assumptions)
Office
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
17.5%
6 mths
8.0%
6 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$150/m²
% of Value
6.1%
incentives, etc).
SushiSushi
3%
LobbyCafé
2%
Comments
AGL
26%
Other
19%
%ofNetLettableArea
CGU
Insurance
50%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
A well positioned older style 1970s office building offering conventional B-Grade office accommodation. Constructed circa 1970s, the building has undergone
subsequent refurbishment in the early 2000s. Reversionary risk in 2017 when the major tenant CGU Insurance (49% NLA) expires in February, 2017. Sold
after an EOI campaign in late 2012 to a European Fund.
Sales Analysis
Building 3, 658 Church Street, Richmond
Sale Date
Sale Price
Vendor
Purchaser
Description
Site Area
NLA
Parking
Vacancy
No. of Tenants
Major Tenants
Net Passing Income
November 2012
$29,100,000
APGF Management Ltd
Winehall Proprietary Limited
Originally constructed in 1981 with extensive refurbishment
works in mid 1990s. Comprises a part two and three storey
office complex that is 100% leased to three tenants and is the
national head office of Country Road Australia, located in the
Richmond Corporate Park, less than 2.5 kilometres east from the
CBD.
10,276m2
Office
8,205.0 m²
Retail
0.0 m²
Total
8,205.0 m²
228 car bays
0.0%
3
Country Road
$2,740,780
Inputs
Insert Photo
Analysis
Office
$376/m² pa
9.4%
Retail
$0/m² pa
Core Market Yield
8.8%
9.4%
Rental Growth
Office
3.3%
Retail
3.6%
Rate/m² of NLA
$3,547/m²
Outgoings
Terminal Yield
$76/m² pa
8.75%
Income
Area
1.2 yrs
1.2 yrs
Average 10 yr
Leasing allowances
assumptions)
Office
Income
Area
1.2 yrs
1.2 yrs
Retail
Office
Retail
Avg Incentive
Downtime
Avg Incentive
Downtime
20.0%
6 mths
5.5%
7 mths
0.0 yrs
50%
50%
Capital Expenditure
At Expiry
$150/m²
% of Value
3.9%
incentives, etc).
MoodMedia
1%
Comments
Clemenger
HarvieEdge
32%
%ofNetLettableArea
CountryRoad
67%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
FutureExpiries
Vacant
Iconic part two and three storey office complex that sold 100% leased to three tenants. Good location to the fringe of the CBD. Provides ample natural light and
views across the Yarra River. The sale followed a successful EOI campaign in March 2012.
Sales Analysis
Sales Analysis
850 Collins Street, Melbourne Docklands, VIC
Sale Date
October, 2011.
Sale Price
$114,200,000 prior to acquisition savings.
Vendor
Lend Lease Development Pty Ltd.
Purchaser
CIMB Trust Capital Aust. Office Fund No. 1
Description
Under construction, with an expected completion date of October 2012, nine level
office building 4.5 to 5 star NABERS with 2,000 m2 floors plus a small retail
component and a 21 bay car park. The purchase also included a separate 60 bay
car park (also let to Aurecon) at 888 Collins Street. Floors have excellent natural
light and a side central core with bay views, however the bay views may be built
out as the precinct develops further.
Land Area
2,525 m2
NLA
17,185 m2
Parking
21 lower ground level car spaces.
Vacancy
45% (levels 1 – 3 plus retail and 9 cars).
No of Tenants
One.
Net Passing Income
$4,129,680 per annum (Aurecon only).
Inputs
Market Rentals
Analysis
Office:
$415/m2 net face.
Retail:
$550/m2 gross face.
Parking:
$375 pcm plus levy.
3.62% to 3.8%
Core Market Yield*
6.5% to 6.81%
Avg. Rental Growth
4.49%
IRR
8% to 8.68%
Outgoings
$100/m2 plus $100k pa for non recov
including the separate car park
116%
Terminal Yield
7.25%
Rate/m² NLA
$6,618/m² Overall
Leasing Allowance
6 Month vacancy allowance, 20% Incentive & 12%
Agents commission.
Capital Expenditure
Ongoing $50k pa rising to $10 psm at Year
10 plus prov for no make good for Aurecon.
2
$6,250/m Ex. Cars
WALE Duration (Yrs)
10 years (Aurecon)
Lease Expiry Calculated by Gross Passing Income
$6,000,000
Gross Rental p.a.
$5,000,000
$4,000,000
$
$3,000,000
$
$
$2,000,000
$1,000,000
$0
Aurecon
100.00%
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020 and
beyond
Year Ended 30th June
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for
property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
Comments
Purchase was settled on the land recorded in Nov 2011 at $7m, according a core price after acquisition cost savings of $108.6m. We understand there is no delivery
risk to the purchaser, which is guaranteed by the listed Lend Lease. We also understand the vendor took the liability for the Aurecon incentive, but there is no vendor
rental guarantee, with the price at $114,200,000 including the additional car park, and the purchasers accepting the costs of letting up and incentives on Levels 1 – 3
(6,450 m2) plus the 9 vacant cars, which we estimate at just over $5m. The core price of $108.6m reflects a 6.81% CMY and 8.68% IRR and the face price reflects a
6.5% CMY and 8% IRR.
Sales Analysis
Sales Analysis
150 Collins Street, Melbourne, VIC
Sale Date
July, 2012
Sale Price
$181,000,000 (approx.)
Vendor
Grocon and APN
Purchaser
GPT Wholesale Office Fund
Description
13 level new office tower purchased in the very early stages of construction.
Comprises basement parking, ground floor retail and 12 level of high A grade office.
Floor plates are 2,000 to 1,500 m2 with a western side central core, and have
excellent natural light. Heritage controls protect the surrounding outlook. 5 star
NABERS and 6 star Green Star ratings are the target.
Land Area
2,927 m2 (99 year leasehold interest comm 2008)
NLA
21,090 m2
Parking
143
Vacancy
0%
No of Tenants
12
Net Passing Income
$11,854,000 pa approx. after non recoverables prov
Inputs
Market Rentals
Analysis
Office:
$550/m2 (net face)
Retail:
$1550/m2 (gross effective)
6.55% to 7% approx.
Core Market Yield*
6.46% to 7% approx.
Office – 4.3%
IRR (after costs)
8.5% to 9% approx
Retail – 3.5%
102.4%
Outgoings
Cars – 3.75% (ave)
Approximately $115/m2 plus non recoverables prov
Rate/m² NLA
$8,582/m²
$8,005/m2 ex cars
Terminal Yield
6.75% with prov for Westpac expiry risk in the terminal value
WALE Duration (Yrs)
9 yrs by Income
Leasing Allowance
9 months downtime prov for major tenant. Gross incentive allowance
of 15% and a 50% retention rate at expiries.
$50k pa ongoing growing to $200k pa, plus make good provisions.
Parking:
Avg. Rental Growth
Capital Expenditure
$500 to 550 pcm
10.5 yrs by Area
Lease Expiry Calculated by Gross Passing Income
Westpac
68.16%
$12,000,000
Vendor Rental
Gaurantee
28.85%
$10,000,000
$
Gross Rental p.a.
Commercial
Car Park
2.99%
$8,000,000
$8
$6
$6,000,000
$4,000,000
$4
$2,000,000
$2
$0
2013
2014
2015
2016
2017
2018
Year Ended 30th June
2019
2020
2021
2022
and
beyond
Comments
Prime office investment purchased on a fund through basis with the usual guarantees on unlet space. 68% of gross passing income is secured by a 12 year lease to
Westpac. The building does sit on the corner of Russell and Little Collins, with a walkway access to Collins Street, however it occupies a strong location in the preferred
eastern sector. The title is a ground lease with a ground rent and fixed increases plus a market review structure after 20 years (2028) with a capping arrangement. The
higher yields above adjust for achieved acquisition cost savings from the purchase in the early stages of development. As a passive investment, for comparison with
established investments, the sale reflects a 6.46% core market yield and an 8.5% IRR As If Complete and fully let, adopting conventional acquisition costs, but no
development risk. The actual return to the purchaser at sale is higher (estimated CMY around 7% and the IRR around 9%), which in our opinion reflects an additional
return for some reasonably minor short term development risk (all projects apart from turn key settlements have some level of development risk until delivered and let)
which is a different basis if one is comparing this transaction to established investments.
Sales Analysis
Sales Analysis
437 St Kilda Road, Melbourne, VIC
Sale Date
July, 2012
Sale Price
$27,020,000
Vendor
Opus Capital
Purchaser
Private investor
Description
1964 built seven level office tower located on a prominent corner location in the St
Kilda Road office precinct on a 3,035 m2 site. The building underwent a shell and
core refurbishment in 2003, including new services and a new façade. 3.5 Star
NABERS rating. Excellent natural light, but only two lifts, the building has been
substantial divided into small tenancies of 100 to 300 m2. Backs onto Fawkner Park.
Land Area
3,035m2 (Approx)
NLA
6,518m2
Parking
100 car bays (1.53 cars per 100m2.)
Vacancy
Nil office (3 cars)
No of Tenants
25
Net Passing Income
$2,156,034 pa
Inputs
Market Rentals
Avg. Rental Growth
Analysis
Office:
$285/m2 - $358/m2 (net face)
Parking:
$280 pcm / car space
Office – 3.1%
Cars – 3.6%
2
Outgoings
Approximately $124/m
Terminal Yield
8.5%
Leasing Allowance
6 months downtime. Net incentive allowance of 7.5% and a 75%
retention rate.
$20,000 pa ongoing plus $150 per square metre make good at
expiries. $100k amenities/tenancy foyer upgrade in years 2 & 6 and
$150k in year 10.
Capital Expenditure
8.0%
Core Market Yield*
7.9%
IRR (after costs)
9.0%
105.0%
Rate/m² NLA
$4,146/m²
$3,539/m2 ex cars
WALE Duration (Yrs)
Income
2.0 years
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Vacant
Yr 4
Future Expiries
Yr 6
Yr 8
Yr 10
Secondary Expiries
Comments
Attractive refurbished B grade corner building with excellent natural light and tenant appeal. Some small areas of say 70 m2 let at $435 psm to $540 psm gross, while 250
m2 plus let at $280 to $295 psm net. Offered for sale by EOI closing 21st June, 2012 and sold shortly after.
Sales Analysis
Sales Analysis
13-51 Pelham Street, Carlton, VIC
Sale Date
July, 2012
Sale Price
$20,600,000
Vendor
McMullin Investments Pty Ltd
Purchaser
Forza Capital
Description
The property comprises two interconnected office buildings. A 1900s two level brick
building and a circa 1991 five level building. Basement car parking is provided for 160
cars. The property is in a popular fringe CBD location, situated on the south side of
Pelham Street in Carlton on a 3,772 square metre site 'Mixed Use' zoned site. In
2011 the building underwent a circa $1 million upgrade to air-conditioning, lift lobbies
and courtyard.
The tenancy profile comprises a mix of State Government
Departments and private corporates. 2.5 Star NABERS rating.
Land Area
3,772m2 (Approx)
NLA
5,905m2
Parking
160 car bays (2.71 cars per 100m2.)
Vacancy
Nil
No of Tenants
9
Net Passing Income
$1,751,598 pa
Inputs
Analysis
Market Rentals
Avg. Rental Growth
Office:
$260/m2 (net face)
Parking:
Office – 3.5%
8.50%
Core Market Yield*
8.38%
IRR (after costs)
9.34%
Cars – 3.6%
99.97%
Outgoings
Approximately $83/m2
Rate/m² NLA
$3,489/m² overall
$3,082/m2 ex cars
Terminal Yield
8.75%
WALE Duration (Yrs)
Income
Leasing Allowance
6 months downtime. Gross incentive allowance of 10% and a 50%
retention rate.
expiries. $280k PV over the next 10 years.
Capital Expenditure
5.0 years
100%
Office
86%
Other
2%
Parking
12%
90%
Retail
0%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Current
Yr 2
Vacant
Yr 4
Future Expiries
Yr 6
Yr 8
Yr 10
Secondary Expiries
Comments
Appealing city fringe office building with a good mix of Government and private tenants proving a 5 year WALE. Offered for sale by EOI closing 7th December, 2011. The
property was in due diligence for some time, went unconditional, 2nd July, 2012 and sold 6th July, 2012.
Sales Analysis
Sales Analysis
Sale Date
March, 2012
Sale Price
$58,000,000
Vendor
AXA Wholesale Australian Property Fund.
Purchaser
Centuria Property Funds (Over 50s Guardian Friendly Society Limited).
Description
Circa late 1980s built 7 level A grade office building situated to the eastern side of St
Kilda Road, south of its intersection with Toorak Road. The property comprises
ground floor lobby and retail accommodation, five upper levels of office
accommodation and two lower levels of secure car parking with some 335 car bays.
The design of the building creates a north and south tower which are linked by a
central core on the northern tower and interlinked by footways across the internal
atrium which has a high glass roof. The shape of the floor plates provides ample
natural light. Substantially refurbished. The building features a rooftop tennis court.
3.5 star NABERS.
Land Area
6,070m2 (Approx)
NLA
16,140m
Parking
335
Vacancy
Nil. (Vendor Guarantee 1.5% NLA)
No of Tenants
17
Net Passing Income
$5,456,291 pa
2
Inputs
Market Rentals
Avg. Rental Growth
Analysis
Office:
$280/m2 (net face)
Parking:
Office – 3.1%
9.61%
Core Market Yield*
8.89%
IRR (after costs)
9.50%
Cars – 2.6%
100.5%
Outgoings
Rate/m² NLA
$3,594/m²
$2,802/m2 ex cars
Terminal Yield
9.50%
WALE Duration (Yrs)
Income
Area
Leasing Allowance
retention rate.
expiries. Additional capex of $900,000 to complete refurbishment.
(excl. Vendor obligations)
Capital Expenditure
3.8
5.4
Comments
A grade office building with ample natural light. Purchased by Centuria Property Funds on behalf of Over 50s Guardian Friendly Society. Property was acquired in March,
2012 and settled in April. The terms of sale require the Vendor must fund the cost of upgrading services to achieve 4 Star NABERS Energy Rating. At sale, refurbishment
to the Level 1 and 3 amenities was underway to be completed by the Vendor prior to settlement. Our analysis incorporates refurbishment costs for the upgrade of all
remaining un-refurbished amenities and lobbies. A 12 month rental guarantee is provided over the vacant office accommodation and car spaces at a rate of $260/m² per
annum net (office) and $3,300 per car space per annum gross (car spaces).
Sales Analysis
Sales Analysis
Defence Plaza, 661 Bourke Street, Melbourne, VIC
Sale Date
August, 2011
Sale Price
$100,000,000
Vendor
Brookfield Prime Property Fund
Purchaser
Real IS
Description
1990 constructed, ten level office building including a small historic 1876 single
storey building. The building has recently undergone a $22m refurbishment and
plant upgrade works which will be completed by the vendor as part of the condition
of sale. A 4.5 star NABERS energy rating is targeted after the completion of the
works.
Land Area
3,326m2 (Approx)
NLA
18,256m2
Parking
64 basement car spaces.
Vacancy
Nil.
No of Tenants
Single Government tenant (Navy).
Net Passing Income
$7,688,972 per annum.
Inputs
Analysis
Market Rentals
Office:
$391/m² net face.
7.69%
Parking:
$475 pcm plus levy.
Core Market Yield*
7.53%
Avg. Rental Growth
4.49%
IRR
9.2%
Outgoings
$82.49/m2
100%
Terminal Yield
8.0%
Rate/m² NLA
$5,478/m² Overall
Leasing Allowance
12 Month vacancy allowance at expiry, 20% Incentive
& 12% Agents commission.
Capital Expenditure
Ongoing $100,000 per annum in years 1-5,
$150,000 per annum years 6-8 and $200,000
per annum thereafter. $2,000,000 Capex in
year 10 plus $300 psm make good provision
at lease expiry. (lessee has no make good)
$5,228/m2Ex. Cars
WALE Duration (Yrs)
9.5 years
100%
80%
60%
40%
20%
0%
Department of
Defence 100%
Current
Yr 2
Yr 4
Yr 6
Yr 8
Yr 10
Future Expiries
*Core Market Yield = the percentage return/yield analysed when the assessed fully leased net market income is divided by the adopted value/price which has been adjusted to account for
property specific issues (i.e. rental reversions, rental downtime for imminent expiries, capital expenditure, current vacancies, incentives, etc).
Comments
The building is a 24 hour Navy installation with considerable Navy technology infrastructure and Navy have occupied for 10 yrs prior to this lease. The building has
good natural light and 2,000 m2 floor plates and the property holds significant reversionary risk if Navy exit in this location. The current tenant has taken a whole
building lease which includes ground floor common area of approximately 770 square metres and our analysis is couched on the reversionary NLA which does not
include this area. The lease face rent on the office component, including the common area, is $375 psm net plus parking. The passing rent is at the upper end of the
market range for the location. Current income includes after hours air conditioning of $209,159 (net of costs) which we NPV’d at a discount rate of 20%. Our DCF
parameters assume a 50% renewal probability at expiry with a 12 months letting up period and a further 12 month rent incentive. $1,000,000 plant upgrade for the air
conditioning and $1,000,000 for foyer works at lease expiry have also been provisioned.
Sales Analysis
Sales Analysis
Sale Date
April, 2012
Sale Price
$28,540,000
Vendor
Centuria Funds Management Limited
Purchaser
Undisclosed private investor
Description
The property comprises a modern commercial office building constructed in circa
1990. The building entails two levels of parking, ground floor retail and office and 9
upper levels of office comprising 800 m2 floors with a side central core. The floors
have good natural light and 6 floors have been refurbished including the common
areas. Most floors have been divided into smaller tenancies.
Land Area
2,144 m2 (Approx)
NLA
7,206 m2
Parking
128 car bays
Vacancy
Nil
No of Tenants
10
Net Passing Income
$2,346,058 pa
Inputs
Market Rentals
Avg. Rental Growth
Analysis
Office:
$270/m2 pa (net face)
Parking:
Office – 3.4%
8.22%
Core Market Yield*
8.02%
IRR (after costs)
9.10%
Cars – 3.4%
100.5%
Outgoings
Rate/m² NLA
$3,960/m²
$3,288/m2 ex cars
Terminal Yield
8.5%
WALE Duration (Yrs)
Income
Area
Leasing Allowance
6 months downtime. Net incentive allowance of 20% and a 50%
retention rate.
$20,000 pa ongoing plus $100 psm upgrade capex at expiries plus
$750k for lift upgrade
Capital Expenditure
5.9 years
5.5 years
Comments
Attractive low A Grade office building with good tenant appeal but located outside the prime area of St Kilda Road. The building has been refurbished following a large
vacancy to six floors, which including upgrade of the common areas and new air conditioning plant, with the office floors retaining the original ceilings and lighting and lift
plant. The building’s lift plant and tenancy lighting will require an upgrade over time which has been factored into our assessment. Good quality tenant profile, dominated
by Alfred Health who occupy 33% of the building with a 2021 expiry. NABERS exemption at sale, as a result of the recent upgrade works.
Sales Analysis
Sales Analysis
477 Collins Street, Melbourne, VIC
Sale Date
February, 2012
Sale Price
$67,000,000
Vendor
Australian Unity Investments Office Property Trust.
Purchaser
Aviva Investors Asia Pacific Property Fund.
Description
Comprises the retained portions of the heritage listed Olderfleet, South Australian
Insurance and Record Chambers buildings originally constructed circa 1890, a
modern 8 storey office building constructed circa 1985 and refurbished in 2001 and a
7 level car park completed in two stages during 1977 and 1985, comprising 598 car
bays. The property is located to the south of Collins Street between King and William
Streets. The property further benefits from rear frontages to Flinders Lane. The
property comprises ground and lower ground retail accommodation, with office
accommodation located on the ground floor and seven upper levels. A central light
core provides ample natural light. A rooftop tennis court and recreational area is
located above the car park for the sole use of one tenant occupying two whole office
floors, being Cap Gemini Ernst and Young Australia. The property is further
considered to be appropriate for future redevelopment.
Land Area
3,899m2 (Approx.)
NLA
11,987m
Parking
598
Vacancy
10.6%
No of Tenants
8
Net Passing Income
$5,028,045 pa
2
Inputs
Analysis
Market Rentals
Avg. Rental Growth
Office:
$300/m2 - $320/m2 (net face)
Parking:
Office – 4.1%
Cars – 3.7%
2
Outgoings
Approximately $115/m
Terminal Yield
8.75%
Leasing Allowance
retention rate.
expiries. .
Capital Expenditure
7.50%
Core Market Yield*
8.13%
IRR (after costs)
9.71%
97.8%
Rate/m² NLA
$5,590/m²
$3,095/m2 ex cars
WALE Duration (Yrs)
3.7
100%
Office Rental
55%
Car Parking
38%
Retail Rental
7%
80%
60%
40%
20%
0%
Current
Yr 2
Secondary Expiries
Yr 4
Yr 6
Future Expiries
Yr 8
Yr 10
Vacant
Comments
Substantial car park component representing some 38% of the total income located within a high demand permanent parking precinct. Offered for sale via EOI closing
11th August, 2011. Sale and settlement occurred on 17th February, 2012. The IM referred to redevelopment potential suggesting additional development of
approximately 24,000 – 25,000 square metres. The Singapore based investors has established a strong presence in property acquisition in Australia during 2012.
Sales Analysis
Sales Analysis
565 Bourke Street, Melbourne, VIC
Sale Date
February, 2012
Sale Price
$53,500,000
Vendor
Eastern Holdings Ltd.
Purchaser
Shakespeare Property Group Pty Ltd.
Description
Comprises the former Gollin & Company building encompassing a five storey
historical office building plus basement level, constructed in 1901 and situated to the
south western corner of Bourke and Church Streets, and an adjoining 16 level office
tower, located on the south eastern corner of Bourke Street and Gallagher Place,
constructed circa 1990. The office tower comprises ground floor retail and office
accommodation, an atrium foyer up to level 2, 15 upper floors of office
accommodation and a car park over two basement levels. The car park is accessed
via Gallaghers Place and provides 64 car bays. The building features a central offset
service core, ample natural lighting and a 2 Star NABERS rating. Floor plates vary
with the majority being approximately 1,000 square metres.
Land Area
1,688m2 (Approx)
NLA
15,966m
Parking
64
Vacancy
5.4%
No of Tenants
15
Net Passing Income
$4,470,327 pa
2
Inputs
Market Rentals
Avg. Rental Growth
Analysis
Office:
$290/m2 - $340/m2 (net face)
Parking:
Office – 4.1%
Cars – 2.7%
2
Outgoings
Approximately $79/m
Terminal Yield
9.25%
Leasing Allowance
retention rate.
expiries. Additional capex in line with vendor TDD report.
Capital Expenditure
8.36%
Core Market Yield*
8.66%
IRR (after costs)
9.63%
91.5%
Rate/m² NLA
$3,351/m²
$3,170/m2 ex cars
WALE Duration (Yrs)
2.2
Comments
Offered for sale via tender closing 25th August, 2011. The property sold in February, 2012 with settlement in March, 2012.B grade office tower with historic elements to
the 5 storey corner building constructed in front of the 16 level tower. The building requires significant life cycle capex. Current income accounts for outstanding rent
abatements to Thomson Reuters and Commonwealth of Australia. The core market yield analysis incorporates 36 months of adjustments including capex allowances of
$3.4 million. The location in the western precinct, is less preferred to the eastern precincts, however the subject enjoys close proximity to public transport including
Southern Cross Station. Additional capex of $5.1 million over the cash flow has been provisioned.

Knight Frank Valuations

Transcription

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