18/09/2019 - 14:09

Warrington strikes this year's biggest Perth office sale

18/09/2019 - 14:09

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ASX-listed investment fund Centuria will acquire Warrington Capital Partners’ William Square office building in Northbridge for $189.5 million, in the highest value commercial property transaction in Perth since December last year.

Warrington strikes this year's biggest Perth office sale
Warrington invested $50 million on a comprehensive revamp of William Square. Photo: Gabriel Oliveira

ASX-listed investment fund Centuria will acquire Warrington Capital Partners’ William Square office building in Northbridge for $189.5 million, in the highest value commercial property transaction in Perth since December last year.

Centuria announced to the ASX today that it had entered an agreement to acquire William Square, at which Warrington invested $50 million on redevelopment works after acquiring the building for $101 million midway through 2015.

Major tenants at William Square include the Australian Taxation Office and flexible office provider WeWork, which is undertaking fitout works ahead of a December opening.

William Square has a weighted average lease expiry (WALE) of 7.7 years and is 100 per cent occupied.

Warrington founding director Chris Weaver said the divestment of the building was aligned with the company's investment strategy and demonstrated its ability to identify value-add opportunities.

"We remain focused on identifying and investing in further opportunities and the management team continues to have significant and increasing co-investment alongside our external investors to ensure our interests are aligned," he said.

Centuria Metropolitan REIT fund manager Grant Nichols said the company was attracted to the rejuvenated Northbridge area.

“The Northbridge area has been the subject of approximately $6 billion of government and private investment, with a number of new hotels and retail offerings improving the appeal of the area to tenants,” he said.

“The acquisition of William Square increases CMA’s exposure to Perth as market conditions improve and provides an attractive value spread to comparable quality properties on the east coast.”

Once the transaction is complete, Centuria’s Metropolitan REIT will hold three Perth assets, with William Square joining 144 Stirling Street and 42-46 Colin Street in its portfolio.

Centuria is also active in Perth’s industrial land arena, adding two Hazelmere assets to its holdings earlier this year in a deal worth $23.8 million.

The $189.5 million price tag for William Square trumps all office transactions in Perth this year, and represents a capitalisation rate of 6.4 per cent.

Research from commercial agency Savills indicates only two notable sales have occurred in 2019 – Elanor Investors’ $24 million acquisition of 34-50 Stirling Street and Warrington’s $18.25 million purchase of 179 St Georges Terrace.

Savills said there were around $526 million in office transactions worth more than $5 million in the 12 months to June 2019 in Perth, highlighted by Singaporean investment group GIC Real Estate acquiring Exchange Tower from co-owners AMP Capital and Primewest for $309.4 million.

While Savills said it expected interstate and international investors to sharpen their focus on Perth in coming months and, with the city recognised as a counter-cyclical opportunity, the marketing of significant assets was relatively rare.

Stockland’s Durack Centre at 2 Victoria Avenue and GDI Property’s 2 Mill Street are among the most prominent properties available for sale.

 

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