ASX-listed GPT Group will kick off construction on its new $300 million tower in Parramatta after securing QBE as an anchor tenant.
The group have secured a pre-commitment lease for 51 per cent of its 26,000sq m office tower, the latest addition to Parramatta's burgeoning commercial office market.
The deal comes as GPT announced its half year results this week, delivering a net profit of $728.5 million for the six months to June this year, down three per cent on the previous year.
GPT Group secured development consent from the City of Parramatta Council to construct the building at 32 Smith Street earlier this year.
The pre-commitment allows for construction to begin on what GPT’s head of office and logistics Matthew Faddy says will become one of Parramatta’s iconic landmarks.
“Parramatta, which has one of the lowest vacancy rates for any office market in Australia, is expected to see continued strong demand for quality office space,” Faddy said.
Dubbed Sydney's "second CBD", Parramatta's office market is earmarked for expansion thanks to a growing Western Sydney population and significant infrastructure investment. Council is investing $1.2 billion into the nearby Riverbank cultural precinct.
Completion of the Smith Street development is expected by late 2020.
GPT chief executive Bob Johnston said the group is on track to meet its guidance for the financial year.
“The half year result was driven by strong valuation gains across the Group’s investment portfolio, particularly in Office, which benefitted from strong market rental growth,” he said.
GPT's office portfolio recorded a $377.9 million valuation gain during the period, largely driven by Sydney's market rent growth.
Johnston said the group's development pipeline continues to progress.
Projects include an office development in Sydney Olympic Park and two Sydney based logistic sites expected to be completed by the end of this year.
The group also acquired a new logistics complex in Melbourne suburb Sunshine for $74 million.
“GPT remains in strong financial shape, with net gearing of 24.7 per cent and a weighted average debt term of 6.6 years,” Johnston said.