GPT buys Melbourne office towers in $608m deal

By Carolyn Cummins
Updated September 3 2014 - 2:18pm, first published 1:55pm
The Corner of Bourke and William complex, which GPT and its Wholesale Office Fund have agreed to buy.
The Corner of Bourke and William complex, which GPT and its Wholesale Office Fund have agreed to buy.

GPT and its wholesale office fund have expanded their presence in Melbourne with the $608 million acquisition of the two towers at the 'Corner of Bourke and William' complex, known as CBW, from super fund Cbus.

Under the deal, GPT and GPT Wholesale Office Fund (GWOF) will each buy a half-share of the 181 William Street and 550 Bourke Street office towers and the Goldsbrough Lane retail area.

GPT's chief investment officer Carmel Hourigan said the transaction takes the group's acquisitions to $1.7 billion since the start of 2014.

Mr Hourigan said the deal would boost GPT's balance sheet with property management and funds management fees on top of its 50 per cent share of the transaction.

It was completed on a capitalisation yield of 6.5 per cent, indicating that it is "under rented" and has the opportunity for growth. The tenants include IAG, Deloitte, Ashurst, Baker & McKenzie and Crowe Horwath. 

Ms Hourigan added that the deal reflected GPT's view on the "future performance of the Melbourne CBD office market".

"GPT now has 88 per cent of its office portfolio in Sydney and Melbourne, which is where we continue to see the most promising signs of a recovery,' Ms Hourigan said.

Analysts said the deal would add to GPT's earnings.

Cbus is also selling its 700 Bourke Street building, and will use the funds for new purchases. The superfund is in the running for a range of retail assets that are being marketed by Lend Lease, among others.

GPT reported an interim profit for June 30 of $240 million and has funds under management of close to $10 billion. It is aiming to create a $250-$300 million metropolitan office property fund and a similar wholesale industrial property fund.

The fund manager for GWOF, Martin Ritchie, said CBW was a very well-located, nearly new asset which makes it attractive to a wide range of quality tenants.

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