132 Arthur Street - North Sydney, NSW
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132 Arthur Street, a 13-level B-grade office tower was acquired for 36.75 (AUD) million dollars or 4,665 (AUD) dollars per sqm in November 2014.
The gearing ratio was 65%, and debt was locked in at an interest rate of circa 4% per annum for the intended five-year investment period.
The asset was acquired as an outstandingly located institutional-grade core-plus asset with a WALE of 3.35 years and passing yield of 10.07% per annum.
Value-add opportunity existed in the re-leasing of the asset as the old leases ran off, improving the leasing profile of the asset and on-selling the asset at a compressed capitalisation rate based on minor cosmetic upgrades and improved leasing profile.
Net rental distributions tracked in the vicinity of 8% per annum, distributed quarterly, for the period.
At the end of 2016, a residential developer made an offer to acquire the asset with the intention to hold the property for rental income and land-bank the building, with the view to undergo a future rezone and repurpose as a premium residential apartment development.
The sale exchanged for a sales price of 70 million (AUD) dollars, or 8,889 (AUD) dollars per sqm, reflecting a sales capitalisation rate of 5.7% . Settlement of the sale was in April 2017 with repayment of the principal investment and an investment return reflective of a 42.8% annual IRR or 2.25 x money multiple, over the 29-month holding period.
Asset type: Core Plus
Investment type: Equity co-investment
Forecast return: 42.8 percent IRR or 2.25 x money multiple
Status: Complete
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Warning:
Returns are not guaranteed. Past performance is not a reliable indicator of future performance.
Forecasts are based on assumptions and estimates. Actual performance could differ materially and therefore it is not appropriate to rely on forecasts or assume that they will always be accurate.