Irongate acquires A-grade office building in Australia’s capital city

Irongate Group (IAP) has announced the acquisition of an office property in Canberra, the capital city of Australia, and a fully underwritten institutional placement.

IAP has contracted to acquire a 100% interest in the property located at 38 Sydney Avenue, Canberra ACT for a total purchase price of A$73.75 million which equates to an initial yield of 5.13%. The company has also announced a fully underwritten institutional placement to raise approximately A$50 million at an issue price of A$1.47 per stapled security to partly fund the acquisition and the associated transaction costs.

The property is an A-grade office building comprising of 8 901m2 of accommodation across four levels in one of Canberra’s prime office precincts. It is 55% leased to the Australian National Audit Office, a department of the Australian Federal Government, with 13.5 years remaining on the lease term and annual fixed rent reviews of 3.5%.

The balance of the office space (3 920m2) is subject to a twenty-four-month non-refundable gross rent guarantee provided by the vendor, resulting in a weighted average lease expiry (WALE) for the property at completion of eight and a half years.

This transaction builds on IAP’s track record of acquiring strategically located, good quality income-producing properties. The Property has had approximately A$12.6 million spent on fit out and refurbishment works in the last two years including a full atrium lobby upgrade, the addition of end-of-trip facilities and refurbishment of on floor amenities” comments IAP CEO, Graeme Katz.

The Canberra office market proved resilient through the Covid-19 pandemic, underpinned by the government sector. The property is located 500m from Parliament House in a precinct with A-grade vacancy of less than 1%, and this, together with the property’s NABERS energy rating of 4.5 stars and large floor plates that are easily subdividable, gives us confidence with respect to future leasing activities.”

The placement, the proceeds from which will be used to partly fund the Acquisition, provides IAP with the opportunity to increase liquidity while preserving balance sheet capacity for future growth. Post the Acquisition and Placement, IAP’s gearing will be 30.6%, at the lower end of the target range of 30% to 40%” he concludes.

The acquisition is due for completion on 29th of June 2021.

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