GOZ portfolio diversifies further

Posted On Thursday, 28 June 2012 16:33 Published by
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Growthpoint Properties Australia, a publicly traded ASX listed A-REIT (ASX:GOZ), has agreed to acquire A-Grade Canberra office buildings, 100% leased to the Commonwealth Government. It’s portfolio value has more than doubled over the last three years, from 24 properties valued at AU$662 million in June 2009, to 41 properties worth AU$1,6 billion (approximately ZAR13,5 billion) as a result of these transactions which incude a diversification from both a location and sector perspective

“These assets provide an excellent investment opportunity and continue to achieve GOZ’s strategic objectives of delivering distribution growth to investors through acquisition and diversification, targeting well-tenanted, quality, modern properties,” says Estienne de Klerk, Director of GOZ and Growthpoint Properties Limited (JSE:GRT) which owns 64.5% of GOZ.

The portfolio has also diversified from purely industrial to a spread of 49% offices and 51% industrial property, by book value. GOZ has an investment mandate to invest in office, industrial and retail property sectors.

This is GOZ’s first acquisition in the Canberra office market, further diversifying the regional representation of its office portfolio.

De Klerk explains that the acquisitions are expected to enhance GOZ’s and Growthpoint’s distributable income.

Growthpoint Australia Managing Director Timothy Collyer reports that GOZ’s distributable profit for the year ending 30 June 2013 is now estimated to be between 19.1 and 19.4 AU cents per stapled security, up from recent guidance of 18.6 to 18.9 AU cents per stapled security.

The acquisitions will initially be fully funded by debt. However, all proceeds from GOZ distribution reinvestment plan (DRP), announced to the ASX on 24 May 2012, to be received in August 2012 will be used to pay down debt.

“Growthpoint South Africa will participate fully in the DRP for the August distribution,” confirms de Klerk. “During Growthpoint South Africa’s 2011 financial year, we received a total return of 28.6% from our investment in Growthpoint Australia. We will continue to support its growth.”

The office acquisition comprises two interconnected buildings, acquired for AU$55.8 million, before acquisition costs, from the GPT Wholesale Office Fund.

“With an income yield of 10.28% per annum on the purchase price before transaction costs, and 9.6% after costs, and the forecast ten-year internal rate of return of 10.50% per annum, this acquisition is particularly compelling,” says Collyer.

The modern “A grade” eight storey office buildings are fully-let to the Commonwealth of Australia for the Department of Education, Employment and Workplace Relations (DEEWR) on a five year lease expiring 24 March 2017. The lease includes one five year option of renewal.

The offices have a net lettable area of some 15,398sqm plus 158 parking bays on land of 3,064sqm. They enjoy a high level of exposure in Canberra’s prime office and retail precinct.

An AU$11 million refurbishment was recently completed at the buildings, complemented by a major new fit-out by DEEWR.  Prior to the refurbishment, each property enjoyed a 5 star NABERS energy rating. The property will now be subject to a new ratings assessment.

In a separate transaction GOZ also purchased a leasehold car park in Richmond, Victoria that is proximate to the General Electric (GE) National Corporate Headquarters also owned by GOZ. The open carpark in Victoria comprises 92 spaces and generates an income of approximately AU$150,000 per annum from its two tenants GE (50 car spaces) and Avexa Limited. It was purchased for AU$1,0 million.

Last modified on Thursday, 28 June 2012 17:12

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