Charter Hall has sold a fully leased A-grade office building in Perth to Centuria Metropolitan REIT for $50 million.
Predominantly leased to the Western Australian Government, the Hatch Building at 144 Stirling Street sits in the fringe office precinct approximately 1km north of the commercial CBD core and provides both the security of high quality tenants and future development potential.
The deal reflected a passing initial yield of 8.6 per cent and a core capitalisation rate of 7 per cent.
The building comprises 11,042sq m of net lettable area on a prominent 5,062sq m corner location and includes a ground level foyer, ground level office, and three levels of office accommodation above. The property was substantially redeveloped in 2001 and refurbished in 2011 and offers 242 parking bays.
Along with the Hatch building, Centuria also acquired the SGIO building at 46 Colin Street in West Perth from DEXUS property group for $33.6 million. Coupled with the $58.2 million Hatch sale, Centuria has entered the Perth office market with these combined $92 million purchases.
The Hatch building was negotiated jointly by Savills and JLL, with Knight Frank Australia and Ray White Commercial brokering Colin Street. Nigel Freshwater and Simon Storry of JLL said there was a lot of interest from both local and offshore investors, including a number of competing REITS.
In late August, the Insurance Commission of Australia sold
Westralia Square, an 18-storey, A-grade CBD office tower, to GDI Property Group for $216.25 million. The sale of Westralia Square marks the Commision’s exit from the commercial property market.
According to Graham Postma of Savills, “The area immediately surrounding has benefitted from a recent surge of development, including several high quality commercial and residential developments.”
John Williams of JLL believes the attention from investors in the Hatch sale confirms the depth of interest from investors in Perth’s office market. Compared to other Australian capitals, Perth is now seeing exceptional value as the office rental market has reset and looks to deliver income growth in the medium term.