• 46,288 sqm of leasing or 4% of the total portfolio, including 18,711 sqm under letters of intent (LOI)
• Rent reviews increased an average of 4% and delivered A$3.1 million of additional revenue.
• New rental highs achieved in Brisbane and Tampa
Chief Executive Officer, Adrian Taylor said: “We are pleased with the strong results that have been achieved over the past three months, reflecting the high quality of assets in the portfolio. The portfolio remains well leased to a diverse customer base and the proactive asset management approach of the teams in Australia, Chicago, Tokyo and London continue to work to secure long term, stable revenue opportunities for the Trust.”
The Australian portfolio remains 100% leased. The asset management team’s focused efforts has maintained the portfolio’s record occupancy levels with leases signed totalling 14,883 sqm and terms agreed for a further 9,282 sqm through forward leasing commitments to new, existing and expanding customers.
The key leasing transactions completed during the quarter are as follows. Further details are in the Annexure.
Goulburn Street, Sydney
During the quarter, leases over 3,986 sqm were executed resulting in an increase in occupancy levels from 86% to 99%. This includes engineering services firm, Parsons Brinckerhoff‘s renewal of 835 sqm on level 7 and expansion over level 6 (835 sqm). Since acquisition, net rents achieved in the building have ranged between $400 – $480 psm, well above the average rent of $311 psm at the time of acquisition and representing a 28% increase above the recent valuation. Furthermore, incentives across these leases have averaged just 6%.
The Denison, North Sydney
Media Communications, a subsidiary of the global media group, Young & Rubicam, has signed a five year renewal over 3,496 sqm on three levels, equivalent to 23% of the building. The new rent is 6.5% above the prior rent and takes the weighted average lease expiry (WALE) for the property to four years.
Citi Centre, 2 Park Street, Sydney
A new lease was agreed at Citi Centre at 2 Park Street, Sydney with Australian Reward Investment Alliance (ARIA) on part of level 41 of the building for a seven year term. Additionally, Hicksons lawyers have exercised their option to renew their lease for four years over 1,865 sqm and expand into a further 492 sqm. The recent high rents achieved in the building should provide strong support for upcoming market rent reviews of over 15,000 sqm.
175 Eagle Street, Brisbane
SMS Consulting Group have recommitted to the building and exercised their option for four years over 810 sqm on level 18 of the building, agreeing to a rent of $1,050 psm gross.
During the quarter, leases were signed over 48,780 sq ft, with terms agreed over a further 60,838 sq ft, with expansions of existing customers representing a significant proportion.
The key leasing transactions completed are as follows.
SunTrust Financial Center, Tampa, Florida
Occupancy in the building is 91% following 53,141 sqft of renewals and expansion at an average rent of just below US$29 psf gross, increasing the property’s WALE to 5.5 years. This includes the recently executed lease renewal with advertising agency, 22squared (West Wayne), over 24,115 sqft, which secured the top two floors in the building for 10 years at 20% above the prior rent.
San Diego Technology Center
Ethertronics has renewed and expanded its lease for 12,502 sqft from June 2008 for five years at a rate of $36.00 psf gross representing a 30% increase over prior rent.
Wachovia Financial Center, Miami
Terms have been agreed over 23,837 sqft maintaining occupancy at 98% at rents between US$40 – $50 psf gross.
During the March quarter leasing terms were agreed over 11,300 sqm including 3,664 sqm under letters of intent (LOI). The portfolio remains 100% income producing.
The key leasing transactions completed are as follows.
City Central, Milan
On acquisition in October 2007, the property was 27% occupied with a vendor guarantee over the balance until October 2009. Terms have now been agreed over more than 11,000 sqm, which will take occupancy to 71%. This includes a new six year lease with Randstad, one of the largest international providers of HR and recruitment services, which will occupy over 4,473 sqm. Avenade (a joint venture between Accenture and Microsoft) and KBC Bank have both signed six-year leases over 1,194 sqm 1,966 sqm respectively. New rents are in line with income guarantee targets.
Interest in the property from major corporations has continued as they are attracted by its large floor plates, modern amenities and location.
Terms have been agreed over 642 sqm or 10% of the Japanese portfolio during the quarter. The new lease terms reflect an average increase of 25% over prior rents resulting in 96% occupancy.
Refer to the Annexure for further transaction details.
Rent reviews finalised in the March quarter across the portfolio have resulted in a weighted average increase of 4% over the prior rent and A$3.1 million of additional annual income. The Australian portfolio rent review of over 68,954 sqm achieved an average increase of 4%, whilst reviews settled in the US portfolio over an area of 1.19 million sq ft, delivered an average 5% increase.
Mr Taylor said: “We are pleased to see continued strong rental reversions from renewals, new leasing and rent reviews in many of the office markets the Trust is invested in. This reflects the continuing demand from customers for premium office accommodation offered by the Trust’s global portfolio.
The portfolio is well positioned with high quality assets and a broad range of customers that include multinational and government tenants. Importantly, over the next four years, on average, less than 10% of leases will expire. Tenant retention remains a key priority for the Trust, particularly in the current environment and management’s active management approach continues to attract new customers and retain existing tenants on long-term lease terms across the portfolio. This, in turn, works to enhance unitholder value."