The second leg of what has been billed as Melbourne’s largest direct property sale completed yesterday, with AMP Capital’s Wholesale Office Fund buying National Australia Bank’s Docklands complex from Cbus Property for $433.5 million.
The move comes a day after GPT, along with its wholesale office fund, paid Cbus Property $608.1m for the CBW twin towers in the Melbourne CBD.
Both deals were handled by Colliers International’s John Marasco, Nick Rathgeber and Leigh Melbourne as well as Ian Hetherington of Savills.
The CBW deal showed a passing yield of 6 per cent and the NAB tenancy at 700 Bourke Street saw that building change hands at a passing yield of 5.7 per cent — one of the lowest yields ever paid for an institutional-grade office building in Melbourne.
The A-grade asset spans 63,000sq m of office space and 770sq m of retail space. The price represented a rate per square metre of $6700, which AMP said was below recent comparable transactions in the Docklands. Key attractions were the building’s long weighted average lease expiry of 13.6 years by income and 4 per cent fixed annual rental increases.
AWOF fund manager Nick McGrath said: “The acquisition is consistent with our strategy to acquire modern, prime office assets in the major Australian CBD markets and is a further example of AWOF recycling capital out of non-core assets into core assets.”
The fund, soon to undertake a capital raising, earlier this year sold a building in Sydney’s Pyrmont and it is moving to sell another Sydney CBD tower for about $100m.
The deal took AWOF’s exposure to Melbourne and Sydney’s core office markets to 93 per cent and over the next decade 700 Bourke Street will deliver a yield of 7 per cent.