Goodman Property JV to buy central Auckland office building for $62M
Goodman Property Trust's joint venture with Singapore government-owned GIC has agreed to buy Bayleys House, a recently completed office building in central Auckland, for $62 million, Goodman Ltd, the trust's manager, said.
The 8,106 square meter low-rise office building adjoins the Fonterra Centre on the corner of Gaunt and Halsey Streets in Auckland's VXV Precinct, an area located between Victoria Park and the viaduct. The acquisition, which remains conditional on the approval of the freehold land owner, is expected to settle in June 2017.
"This is a high-quality acquisition that extends and diversifies the joint venture's portfolio of Viaduct properties. The partnership strategy provides scale for GMT and gives the trust greater exposure to Auckland's fastest growing commercial precinct," said Goodman Ltd chief executive John Dakin in a statement to the stock exchange.
Predominantly leased to real estate specialists Bayleys, technology provider IBM and law firm Mayne Wetherell, the new leases incorporate fixed review structures and have a weighted average term of nine years. The ground lease obligations are structured for a period of 15 years.
Acquired from Goodman Group, which undertook the development on a build-to-lease basis, the purchase price reflects an initial yield of 7.6 percent on contract rentals. Additional fit-out rent increases the passing yield to 8.8 percent, Goodman said.
After this purchase and the purchase of the Datacom Building, which settles today, the joint venture will own seven buildings in the VXV Precinct. With a value of more than $470 million, the portfolio will provide over 88,000 square meters of office accommodation to around 20 customers. The portfolio has an occupancy rate of 96 percent.
Goodman Property Trust units were trading up 0.4 percent at $1.225 but are down 4.1 percent over the past year.