ING Office Fund ('IOF') wishes to advise that it has agreed to acquire Wellington Central, a class A office building currently under development in Perth, which on completion will be fully leased to the Commonwealth of Australia. The building is being acquired for $81.5 million (c. €45m).
Wellington Central is located at 836 Wellington Street, West Perth and features eight levels of office accommodation over 11,906 m² of lettable area in addition to three levels of car parking comprising 139 car bays. The property is being developed by ING Real Estate Development Australia and the Lewis Land Group. The property is being acquired by the Fund on a net initial yield of 6.25% (after costs).
The investment follows the Fund's sale of 1 Adelaide Terrace in July this year for $87 million on a passing yield of sub 5%.
Commenting on the acquisition, CEO of ING Office Fund, Mr. Tino Tanfara said, "Wellington Central represents an ideal opportunity for the Fund to re-enter the Perth market with a high quality asset, in a core office precinct, with an attractive growth profile and at a superior yield. The investment is forecast to deliver strong total returns on a risk-adjusted basis."
Wellington Central will be fully leased to the Federal Government Department of Immigration and Citizenship (DIAC) for 10 years from completion, scheduled to be March 2009. The lease will have fixed annual rental increases with a market rent review during the fifth year, providing the Fund with the opportunity to access market rental upside over the medium term.
The transaction will be funded progressively from the sale proceeds of 1 Adelaide Terrace throughout the construction period. The Funds total expenditure during the construction period will earn an equivalent coupon return until completion and lease commencement.
Commenting further on the transaction, Mr. Tanfara said, "This acquisition reinforces ING Real Estate's ability to source quality off-market transactions for the Fund both globally and locally. The Wellington Central development will leverage the development capability of ING Real Estate in Australia in collaboration with Lewis Land, to create exceptional office accommodation that will carry a minimum 4½ star Australian Building Greenhouse Rating."
Source: ING Real Estate