12/08/2008 - 13:26

Wesfarmers House sold for $85m

12/08/2008 - 13:26

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Ascot Capital Ltd has bought the Wesfarmers House from Orchard Funds Management for $85 million in one of Perth's biggest property sales this year.

Wesfarmers House sold for $85m

Ascot Capital Ltd has bought the Wesfarmers House from Orchard Funds Management for $85 million in one of Perth's biggest property sales this year.

The building was sold by Orchard's privately held Commercial Office Fund.

"The sale of Wesfarmers House by our Commercial Office Fund is in line with our strategy of taking advantage of investment cycles and profits in markets like Perth and Brisbane, where substantial rental growth has already been achieved," Orchard chief executive David Hinde said.

"We felt the time was right to capitalise a gain of $37.3 million for this asset. We will be using the sale proceeds to initially reduce debt and position the Fund to take advantage of any opportunities in the current environment".

Orchard bought the Wesfarmers House in 2006 and is currently fully leased to commercial and resource sector tenants.

Ascot director Greg King said the company was looking forward to upgrading the building.

 

Below is the full announcement:

 

Orchard Funds Management (Orchard) and Ascot Capital Limited today confirmed that they had exchanged contracts for the sale of Wesfarmers House in Perth for $84.8 million representing one of the most significant property transactions seen so far this year.

Commenting on the sale, Orchard's Chief Executive Officer David Hinde said "The sale of Wesfarmers House by our Commercial Office Fund is in line with our strategy of taking advantage of investment cycles and profits in markets like Perth and Brisbane, where substantial rental growth has already been achieved".

Last year the Orchard Commercial Office Fund sold 369 Ann Street, Brisbane, for $48.43 million and 40 Tank Street, Brisbane, for $54.5 million as part of its strategic plan to re-weight out of Brisbane and Perth, markets which have both performed extremely well over the past two years. This has resulted in a combined profit of $84 million for the three asset sales over the last twelve months.

Mr Hinde continued, "We felt the time was right to capitalise a gain of $37.3 million for this asset. We will be using the sale proceeds to initially reduce debt and position the Fund to take advantage of any opportunities in the current environment".

Greg King a director of Ascot Capital said "This sale underlines our group's confidence in WA's future, and reinforces our strategic aim of purchasing quality assets at attractive values".

The Perth market has experienced strong rental growth and according to Mr King, it is expected that the asset will unlock significant rental reversion over the next twelve months. Mr King believed that "the current market environment had brought asset values back to levels that represented good long term value".

Originally purchased by Orchard's Commercial Office Fund in 2006, the 13 level prime office building is situated in the heart of Perth's CBD and is currently fully leased to commercial and resource sector tenants. Mr King stated "we are looking forward to implementing our ideas for upgrading the building which will maintain its status as one of Perth's premier office assets".

The Orchard Commercial Office Fund has $628 million of assets under management and boasts a strong tenant mix with a balanced lease expiry profile. Despite challenging market conditions, the Fund has provided a solid total return to investors of 17.84% per annum over the past two years (to 30 June 2008).

Wesfarmers House adds to Ascot Capital's significant investments in WA with the development of Jandakot Airport and the redevelopment of the WACA cricket ground underlining a multi billion dollar portfolio which will be developed out over the next decade. The deal is subject to Foreign Investment Review Board (FIRB) notification and is being negotiated by Peter Agostino from CB Richard Ellis.

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