This article is from the Australian Property Journal archive
CHARTER Hall has picked up yet another Canberra asset, paying $36 million for the building at the centre of Plan Mercator – designed to protect the Prime Minister and cabinet, Governor-General as well as maintain government operations in the event of a catastrophic attack or national security attack on the national capital.
On the sell-side is ASX-listed Irongate Property Group, which acquired the low-rise 24 Wormald Street property in Symonston early in 2019 for $29.75 million.
It was constructed for the Australian government in 2007 at a cost of $36 million and the new sale comes in at 18% above book value.
The property has a gross lettable area of 4,720 sqm and a data centre component of 680 sqm, as well as 113 parking bays, and is on a 5,185 sqm site within North Symonston industrial estate.
There are six years remaining on its lease to the Attorney-General’s department, which pays about $2 million in rent each year.
According to a job advertisement listed on the Attorney-General’s Department website shortly after the facility was completed, Plan Mercator aims “to minimise the impact of a national security emergency on critical government operations and provide for the rapid resumption of ‘near normal’ government business under alternate arrangements until normal operations can be resumed”.
The job advertisement was for a position within the Secure Services Branch that is based at the facility, and was part of a string of online clues across government department sites pieced together for a report by The Canberra Times in 2008.
Irongate CEO, Graeme Katz, said, “We previously advised the market that we would look to sell properties where we believe valuation creation has been maximised, to protect against downside risk or to improve the overall quality of the portfolio.
“With six years to run on the lease to the Commonwealth of Australia, and strong demand for high-quality office properties, we determined that it was an opportune time to consider a sale of the property.”
He said the also provides an opportunity to rebalance the fund’s geographical exposure to the ACT following its recent purchase of the audit office building at a 38 Sydney Avenue for $73,750,000.
“The proceeds from the sale of the Property will be used to repay debt which will further strengthen the fund’s balance sheet and provide additional debt capacity for future acquisitions.”
Irongate is currently being pursued by 360 Capital, which last month made a $1.1 billion takeover play around the same time Irongate partnered with Frasers Property Australia to take control of the former Bradmill denim factory site in Melbourne’s western suburbs with plans for a $1 billion mixed use development.
National capital’s busy run
Charter Hall has picked up the asset through its Charter Hall Direct Fund 4. The property powerhouse has been a major player in Canberra’s active office market this year, buying the Doris Blackburn building at 18 Canberra Avenue from developer DOMA, the six-level campus-style Services Australia in Tuggeranong for $306 million, and most recently teaming up with Singaporean sovereign wealth fund GIC to buy 50 Marcus Clarke Street, leased to the Department of Education, Skills and Employment, for $300 million.
Canberra’s resilient office market has seen the vacancies fall to a 12-year low due to the heavy presence of government tenants, and ACT buildings leased to government tenants have proven to be hot property in 2021. Yields have tightened by 50 basis points for prime assets.
In other deals, Sentinel Group acquired the nation’s control centre for the COVID response for $83 million, and Lendlease sold the Alan Woods office building for over $115 million to an RAM Australia fund.
