29/08/2017 - 13:29

GDI strikes $216m deal for Westralia Square

29/08/2017 - 13:29

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The Insurance Commission of Western Australia has today accepted an offer from Sydney-based GDI Property Group for the Westralia Square office building in the CBD, taking total proceeds from its property sales over the past two years to more than $800 million.

GDI strikes $216m deal for Westralia Square
GDI property group has bought Westralia Square for $216m. Photo: Attila Csaszar

The Insurance Commission of Western Australia has today accepted an offer from Sydney-based GDI Property Group for the Westralia Square office building in the CBD, taking total proceeds from its property sales over the past two years to more than $800 million.

GDI has agreed to pay $216.25 million for Westralia Square; it is the second deal the property group has struck for a WA asset in the past two weeks, following the announcement of a $143.5 million conditional deal for the IKEA complex in Innaloo on August 18.

Westralia Square sits adjacent to Brookfield Place and comprises a total 32,635 square metres of net lettable area over 18 levels of office space, with an average floor plate of 1,800sqm above a multi-level car park providing a total of 537 car bays on a mix of tenant and public parking levels.

The property was built in 1991 and is currently more than 93 per cent occupied, predominantly by state government departments, with a weighted average lease expiry of 2.5 years.

Insurance Commission chief executive Rod Whithear said GDI had submitted the most competitive offer through the sales process for Westralia Square, with settlement expected to take place in late October.

“The sale of Westralia Square represents the end of the Insurance Commission’s property divestment program,” he said.

“In 2015, we announced the Insurance Commission no longer wanted to be a property developer or holder of direct property of a significant scale. We have subsequently sold three commercial buildings in Perth and two retail shopping centres for over $800 million.

“As a result of the sale of direct property assets, we have contributed more than $869.8 million to reducing the WA government’s net debt and have generated more than $149 million in additional capital gains tax and stamp duty revenue for the WA government.”

GDI is purchasing Westralia Square on a passing yield of 11.34 per cent and plans to fund the acquisition through the proceeds of the sale of its 66 Goulburn Street asset in Sydney, which it recently sold for $252 million, with settlement anticipated for October 19.

GDI managing director Steve Gillard said Westralia Square had all the elements the organisation was seeking in an office building.

“It is well located, has good natural light, easily divisible floor plates, is being acquired for considerably less than replacement cost and offers an opportunity to add significant value through refurbishment and leasing,” he said.

“With the state government leases expiring in the first half of 2020, we expect to be releasing in to a much stronger leasing market and following a major capex program we anticipate high appeal for the property given its central location, excellent river views, large floor plates, significant parking and connectivity to public transport.”

Westralia Square will add to GDI’s existing portfolio in WA, which consists of the CBD-based Mill Green Complex made up of 197 St Georges Terrace, 1 Mill Street and 5 Mill Street, worth $320 million.

At the time of writing GDI shares were up 0.4 per cent at $1.07 per share. 

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