The part owners of Perth's BankWest Tower plan to quit their 50 per cent stake in the prime St Georges Terrace property, worth as much as $140 million, following the confirmed exit of anchor tenant BankWest which will move to Raine Square.
The part owners of Perth's BankWest Tower plan to quit their 50 per cent stake in the prime St Georges Terrace property, worth as much as $140 million, following the confirmed exit of anchor tenant BankWest which will move to Raine Square.
Listed property trust and funds manager Valad Property Group said it had been preparing for a number of months to sell the BankWest Tower, in which Valad Property Trust holds a 50-50 joint venture share with Multiplex.
The 52-storey tower has a total floor space of 39,240 square metres of which 31.8 per cent or 12,473sqm is sublet to a range of tenants including Deacons Lawyers, Goldman Sachs JB Were, Bentleys MRI, Pivot Group, Sinosteel Australia and Saracen Properties.
BankWest occupies 68.1 per cent of the building equating to 26,719 sqm under a head lease expiring November 2009, after which it will leave to anchor the 21-storey Raine Square redevelopment on William Street spearheaded by Luke Saraceni and the Pourzand family.
Valad acquired its significant BankWest Tower share in October 2002 for $92.5 million, while Multiplex gained its half share in September 2004 following a takeover of the Ronin Group, formerly the AMP Office Trust.
A property industry source suggested the sale price of Valad's stake could set a benchmark per square metre for prime Perth CBD property of up to $6,000 per sqm.
"In today's market, the 50 per cent share could sell for between $124 million and $140 million with a potential equated yield of 7 per cent. Considering there is no decent office supply coming on in the next three years, the vacant space left behind by BankWest will likely be negotiated over with existing tenants," she said.
If recent deals are anything to go by, then Valad is bound to make a tidy profit.
Last month, a 50 per cent share in the smaller and older 140 St Georges Terrace ( former AMP building) went for $153.5 million in an AMP inter-company transfer, realising $5,255 per sqm and an equated yield of 7.6 per cent.
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Pasted below is a copy of today's ASX announcement by Valad
Valad Property Group (ASX: VPG) announces the intended sale of Valad
Property Trust's (VPT) investment in BankWest Tower, Perth. It is owned by VPT
in 50:50 joint venture with Multiplex (ASX: MXG).
`We are pleased to be able to announce our intention to sell BankWest Tower
following today's confirmation by BankWest that they are seeking to develop a
new head office,' says Martyn McCarthy, CEO Real Estate Investment.
Valad has been preparing for the sale of BankWest Tower for a number of
months to take advantage of strength in both the Perth and national markets for
commercial real estate assets.
`We have already received a number of unsolicited offers for the building well
over book value,' says McCarthy. `There is a lot of interest in the Perth market
from investors, and significant latent demand for quality office space, especially
for prime CBD assets.'
`We have a number of potential investment assets in our pipeline,' says
McCarthy. `We see this as an opportune time given strong and favourable market
conditions to rebalance our investment portfolio.'
The 52 level BankWest Tower has total floor space of 39,240 sqm of which
31.8% or 12,473 sqm is sublet to a range of legal, government, financial services
and professional services firms. BankWest accounts for 68.1% of lettable area or
26,719 sqm.
Market rents in the Perth CBD have firmed significantly and there is a strong
likelihood of positive reversion at lease expiry. A market rent review is due in May
2007.
BankWest's lease expires in November 2009, and includes a 5 year option
exercisable up to 12 months prior to lease expiry.
`BankWest has been reviewing their tenancy in the building,' says McCarthy. `We
have enjoyed having them as tenants in our building and look forward to the
possibility of more associations in the future. We continue to enjoy excellent
relationships with our other tenants,' he adds.
BankWest Tower was built in 1989 for BankWest. It is located on the much
sought after St George's Terrace in Perth, with total office and retail NLA of
39,240sqm, 123 car spaces, and arguably Perth's most prominent sky signage.
The full text of a BankWest announcement is pasted below:
BankWest, Western Australia's largest financial services employer, has announced it will underpin council-approved multi-million dollar Raine Square redevelopment as its new headquarters on the expiry of its current lease.
The proposed building designed by architect Edwin Bollig is a modern streamlined complex that will complement and enhance the existing Raine Square heritage precinct. It will have 21 floors and approximately 42,500 sqm of floor space, with a minimum Australian Building Greenhouse Rating (ABGR) of "4 and a 1/2" stars.
Construction will commence immediately and BankWest will have full naming rights and signage.
BankWest Chairman Ian Mackenzie said the decision to support this significant Perth development demonstrated BankWest's commitment to Western Australia and its determination to maintain its position as a leading West Australian financial institution.
"We have been operating in Western Australia for more than 110 years. WA is our home state and it is our intention to remain a leading West Australian financial services provider and employer, and an integral part of the West Australian community while we continue to grow our business nationally."
Property consultant Digby Swale of Swale Hynes Consulting assisted the bank in selecting a property from a strong pool of contenders. Mr Mackenzie said Raine Square was selected because it was a good fit for all business requirements, and most importantly would allow BankWest's growing CBD workforce to be co-located in a single location.
BankWest staff are currently housed in a number of buildings throughout the CBD and Northbridge and Mr Mackenzie said bringing them all together would mean better communication across divisions and the retention of a strong, vibrant internal culture as staff numbers increased.
"Over the past two years we have been growing our business nationally and our head office workforce here in our home state of Western Australia has expanded significantly to support that growth," he said.
"Since 2003 WA staffing has increased by more than 35 per cent to 3300 people and we expect ongoing growth over the next few years. The proposed fit-out of the new head office will foster an environment of collaboration, flexibility and efficiency."
Property Developer Luke Saraceni of Saracen Properties, the developer responsible for developing the Raine Square precinct, said BankWest's commitment would not only provide much-needed office space in the Perth CBD, but would help revitalise the retail space around Raine Square.
Mr Saraceni, who is also the State president of the Property Council of Western Australia and an industry representative of the Western Australian Planning Commission said:
"The Raine Square Development together with the development at 140 William Street, the sinking of the railway line and the redevelopment of the train station, will create an exciting new precinct with a strong link to Northbridge.
"The Raine Square development will preserve the heritage buildings and the historical link with Mary Raine and her contribution to the University and medical research."
BankWest has a long and proud history in Western Australia and has assisted in helping to build WA into a strong and prosperous state. Mr Mackenzie said it was only fitting that BankWest should be underpinning the development of such a significant Perth landmark as a base from which to continue to grow its business.
