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SECTION: REAL ESTATE INVESTMENT TRUSTS & FUNDS

Astute GDI makes $116m in three years

GDI Property Group has displayed the midas touch, selling a Sydney CBD office tower for $252 million after buying it only three years ago for $136 million.

GDI has sold 66 Goulburn St Sydney to Singapore’s Ascendas-Singbridge and after selling costs and settlement adjustments, the sale is expected to net GDI approximately $228 million.

The group bought the property in July 2014 for $136 million – below the replacement cost – from the Charter Hall-managed PFA Diversified Property Trust and Australand (now Frasers Property Australia) for $136 million.

Managing director Steve Gillard said this was an excellent result that again demonstrated the GDI’s business model can add significant value to securityholders.

At the time of the acquisition, the 24-level 23,125 sqm property was 76% occupied with a weighted average lease expiry of only 1.8 years, with a number of August 2016 expiries, the largest of which was a single 10,432sqm tenant.

GDI managed to extract a $6 million rental guarantee for the vacant space, which it could draw for a period of up to five years, in the absence of any leasing of the vacant space.

Since that time GDI has leased, renewed or agreed to lease all of the property’s net lettable area.

The Sydney CBD office market vacancy rate in July 2014 was 8.4%, according the Property Council. As at July 2017, it was 5.9%/

“When we purchased 66 Goulburn St Sydney, in July 2014, we anticipated a pick up in leasing demand in the Sydney CBD and we wanted a property that could attract strong tenant demand… we were able to purchase it for well below replacement cost.

“In addition, it had immediate vacancy and an expiry profile that enabled us to capitalise on what we thought would be an improving Sydney CBD leasing market,” he added.

“Since then we’ve leased or agreed to lease 100% of the property’s NLA and increased its weighted average lease expiry profile to over 5 years,” Gillard said.

Australian Property Journal

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