Sources say APT’s Government Property Fund will pay more than $70 million for the former Customs House office building at 414 LaTrobe Street in the CBD, about $120 million for Brisbane’s State Law Building at 50 Anne Street, and about $40 million for a smaller 7-level office building at 62 Northbourne Avenue in Canberra.
The sale prices reflect average passing yields of between 6 and 7 per cent. All properties are leased to government-based tenants.
The properties are expected to more than double the value of the Government Property Fund, which targets government-leased property, health and aged care, transport assets and education facilities.
Government tenants typically absorb building maintenance costs and outgoings often covered by landlords, making these assets attractive to conservative, and rental return focussed property investors.
APT chief executive officer and director Darren Olney –Fraser declined to comment on speculation it had bought the buildings when contacted by Capital Gain. However industry sources say the buildings aligned with APT’s core strategy of buying securely leased buildings, and expect a formal announcement next week.
APT’s Government Property Fund’s other local assets include the Australian Taxation Office in Geelong, Vicroads in Sunshine and a Department of Human Services building in Bendigo. Interstate, it owns assets in South Australia, Western Australia and the Northern Territory.
Other buildings being offloaded by Investa Property Group, which delisted from the Australian Stock Exchange earlier this year, after being acquired by Morgan Stanley include 469 LaTrobe Street, 420 St Kilda Road and 441 St Kilda Road.
It is selling a half share interest in 209 Kings Way in South Melbourne, and the 320 Pitt Street office building in Sydney’s CBD.
CBRE and Colliers International are marketing the estimated $1.3 billion portfolio sale.