Pretoria - Investec Australia Property Fund (IAPF), the JSE-listed Australian domiciled fund, has acquired a 50 percent interest in an institutional grade office tower in the central business district of Brisbane with Abacus Property Group for A$132 million (R1.4 billion).
The transaction will increase the value of IAPF’s property portfolio to A$583m.
Forward yield
IAPF said On Monday that the property comprised a two-storey basement car park with 98 secure parking spaces, ground-level retail, a three-level podium and main tower of 22Âlevels with average floor plates of 739 square metres.
Tenants include Allianz, ANZ, Brookfield Multiplex, North Queensland Bulk Ports, Asciano, American Express and Link Market Services.
IAPF said the property would be acquired on a 12-month forward yield of 7.2 percent with annual contractual rental escalations of 3.9 percent.
But it said it had been acquired with 20 percent vacancy, which equated to about 4 000m2,and there was an opportunity to substantially increase the yield of the property to 8.9 percent on a fully leased basis through strategic capital works and an active leasing campaign.
Strategy
Graeme Katz, the chief executive of IAPF, said the acquisition aligned well with the fund’s strategy and was its third acquisition where it had adopted a strategy to take on existing vacancy, which had proven successful before.
“We believe that the price a square metre of A$6 642 represents attractive value given that recent transactions [in] proximity had been concluded at between A$7 700 and A$9 700 a square metre.”
The acquisition will be funded through the fund’s existing debt facility.
IAPF shares gained 0.97 percent yesterday to R14.63.