Sydney-based GDI Property Group has set its sights on Perth’s IKEA complex in a conditional deal worth $143.5 million.
The ASX-listed fund management company announced last Friday that it had exchanged a conditional contract to acquire the 27,077 square metre retail store in Innaloo, which also includes a further 2,933sqm of accommodation over four peripheral retail units leased to multiple tenants.
The sale is subject to a number of conditions, largely Ikea’s right of first refusal and the vendor’s unitholder approval.
In February, Ikea was set to pay $132 million for the freehold of the Innaloo complex to the current landowners, a trust managed by Lex Property Management, which is chaired and 36.5 per cent owned by Perth businessman Alan Tribe.
However, GDI managing director Steve Gillard told Business News that Lex Property’s unit holders had voted the sale down.Although GDI had proposed a higher dollar figure, Ikea still held the right to buy.
Mr Gillard said he was confident that GDI would get the numbers to vote it through but was not certain of how Ikea would proceed.
Mr Tribe had held the franchise for Ikea in Perth and Adelaide under his private company, Cebas, since the 1990s. He sold Cebas to parent company Ikea Group earlier this year for $170 million, which was seeking to merge IKEA’s Australian operations under single ownership.
The property has a weighted average lease expiry of five years, with Ikea having three five-year options after the retail store lease expires in February 2023.
GDI is purchasing the property on a passing yield of 7.8 per cent and intends to fund the acquisition through a new unlisted trust, which is forecast to have a commencing yield of 8 per cent on conservative gearing of 41 per cent.
As soon as contract conditions have been satisfied, GDI will launch a public raising of $96 million.
If the sale goes ahead it will add to GDI’s WA portfolio that currently consists of CBD-based Mill Green Complex, which comprises 197 St Georges Terrace, 1 Mill Street and 5 Mill Street, worth $320 million.
At the close of trade GDI shares were up 0.97 per cent at $1.04 per share.