GDI Strike $143.5 Deal to Secure Perth IKEA

GDI Property Group has struck a conditional deal to buy the Ikea store in Perth for a new unlisted fund in a $143.5 million deal.

Located at 6 Sunray Drive, Innaloo the store was purchased on a passing yield of 7.8%. The property has a weighted average lease expiry of over five years, with the Ikea retail store lease expiring in February 2023, the company have three five year options.

According to GDI, the Ikea retail store lease has both CPI and market reviews, both of which are subject to a ratchet clause.

[Related reading: GDI Property Group sells Sydney CBD Asset for $252 million]The 27,077 square metre Ikea store was purpose-built in 2008 and incorporated two floors of retail space including showrooms, office accommodation and facilities for co-workers, child-minding facilities, a 400 seat restaurant and café a Swedish food store and high clearance warehouse. There is a further 2,933 square metres of accommodation over four peripheral retail units leased to multiple tenants.

There is onsite parking for approximately 1,000 cars.

GDI Property Group intends to fund the acquisition through a new unlisted unregistered managed investment scheme, "GDI No. 43 Property Trust".

The Trust is forecast to have a commencing yield of 8% p.a, with conservative gearing of 41%. GDI Property Group is expected to launch the approximately $96 million public raising for the Trust as soon as the conditions in the contract have been satisfied. GDI Property Group intends to co-invest in the Trust.

During the last financial year, GDI Property Group have recorded the disposals of 25 Grenfell Street, Adelaide, for an effective sales price of $124 million, $10 million more than its last independent valuation, and 307 Queen Street, Brisbane, for an effective sales price of $141 million, $14.5 million more than its previous independent valuation.

Other highlights included the leasing successes at 66 Goulburn Street, Sydney; 50 Cavill Avenue, Surfers Paradise; and 5 Mill Street, Perth, where occupancy now sits at 98%, 90% and 98% respectively.

Following the settlements of 25 Grenfell Street, Adelaide, and 307 Queen Street, Brisbane, GDI Property Group reduced its principal facility by $240.5 million to $49.4 million, a loan to value ratio of 8.0%.

The ASX-listed GDI Property Group has instigated an on‐market buyback of up to 5% of its securities on issue. As at 30 June 2017, GDI Property Group had acquired approximately 1.1 million securities at an average price of $0.995.