GPT Group has offloaded its 25 per cent share in Sydney’s 1 Farrer Place to Lendlease for $584.6 million, as it moves to increase its exposure to the growing logistics sector.
The listed group announced on Tuesday it has entered into a binding agreement with one of the tower’s co-owners, the Lendlease-managed Australian Prime Property Fund Commercial.
Reflecting robust demand for prime CBD assets amid the pandemic-hit sector, the sale price struck at GPT’s book value of $584.6 million.
The major office deal follows Dexus selling down its 50 per cent interest in the Sydney CBD Grosvenor Place building to existing co-owner China Investment Corporation for $925 million, last month.
GPT and Lendlease each control a quarter share of the precinct, while Dexus owns the remaining 50 per cent.
GPT signalled its plans to offload the Sydney asset, just last month.
GPT chief executive Bob Johnston said the Farrer Place sale capitalises on the strong demand and rare opportunity to purchase landmark office assets.
“The proceeds from the sale will be reinvested into new opportunities including logistics acquisitions and the Group’s development pipeline, which we believe will generate superior long term returns for investors,” Johnston said in a Tuesday announcement.
The sale follows hot on the heels of GPT’s purchase of three logistics properties and 2.35 hectares of adjoining development land at Drystone Industrial Estate in Truganina for $127.6 million, which the group exchanged contracts for last week.
The properties, developed by the Charter Hall-managed Core Logistics Partnership between 2015 and 2019, span a combined 44,137sq m of warehouse and cold storage space.
The deal was struck on a 4.2 per cent yield, fully leased including tenants Target, Woorlworths, The Reject Shop, with a WALE of 8.2 years.
GPT has also recently started its speculative development of a $33 million 16,270sq m warehouse at Berrinba in Brisbane’s south.
“These investments are consistent with GPT’s strategy to grow our exposure to the logistics sector, and complement our significant logistics development pipeline which has an expected end value of approximately $1 billion,” Johnston said.
GPT said 1 Farrer Place, designed by architects Denton Corker Marshall and built by Grocon over three years to 1993, has delivered an annual return of 12 per cent over the past five years.
The building comprises a lobby that unites the two landmark towers. Governor Phillip Tower has 37 levels and Governor Macquarie Tower stands 25 levels.
The transaction is expected to settle by mid-December.