sydney office market

Investec Australia Property Fund has acquired two office building in Sydney,  North Ryde Property and Frenchs Forest Property. The acquisitions increase the Fund’s ex posure to New South Wales, Australia’s largest and best preforming economy.

The total purchase consideration amounts to AUD 160 million (excluding transaction costs):

-AUD 85 million (excluding transaction costs) for the North Ryde Property, which equates to an initial passing yield of 7.0% (pre transaction costs)
-AUD 75 million (excluding transaction costs) for the Frenchs Forest Property, equating to an initial passing yield of 7.5% (pre transaction costs) and a fully leased yield of 8.0% (pre transaction costs)

The North Ryde Property is a four level, high quality, A-grade office building located 10 kms northwest of the Sydney CBD in the established North Ryde commercial precinct. The North Ryde Property was built in 2004 and comprises 15,055m² of office space, 150m² of ground floor retail space and 492 undercover and on-grade car parks.

The Frenchs Forest Property comprises two separate buildings, 20 Rodborough Road and 24 Rodborough Road. 20 Rodborough Road is a campus style office building providing 12,366m² of office space, 325m² of ground floor retail space and 453 undercover and on-grade car parks.

Commenting on the acquisitions IAPF CEO Graeme Katz said: “These acquisitions are attractive in that they increase our exposure to Australia’s largest and best performing economy of New South Wales. These properties secure medium term income for the Fund with a weighted average lease expiry of at least 4.1 years. Furthermore the buildings have extremely low vacancy rates, are occupied by quality tenants, and are ideally located to benefit from rezoning initiatives and surrounding infrastructure developments.”

Katz added: “The acquisitions continue the Fund’s focus of investing in established metropolitan office markets where we see value relative to the major CBD office markets. We are starting to see rental growth in most of Sydney’s office markets and as such, precincts such as North Ryde and Frenchs Forest, which both have comparably favourable net face rents to other Sydney metropolitan office markets, will only become more attractive to cost conscious occupiers.”

Source: Investec