Proving Perth's office market is still on the boil, an A-Grade, eight-storey office building at 1 Adelaide Terrace has just sold to institutional investors for $87 million.
The ING Office Fund-owned property was acquired by Sydney-based GDI Property Group and Fortius Funds Management on an initial yield of 4.87 per cent.
Purpose built in 1988 as the headquarters of Woodside Energy Ltd, the building has a net lettable area of 19,187sq m and was reportedly valued at $47 million in June 2005
Current tenants include the Department of Housing and Works, Soul Digital and Lycopodium Engineering.
The building is the first acquisition in Perth by Fortius, and will be held in its Active Fund No.1 which comprises a number of retail and office assets in Sydney.
GDI meanwhile, started shopping in Perth for the first time last year with the successful acquisition of 12 St Georges Terrace for $22 million in February 2006, which it promptly strata titled.
Jones Lang LaSalle national director of investment sales John Williams said the tight initial yield on the Adelaide Terrace deal indicated the level of confidence institutional investors had in the Perth market to deliver continued growth.
Mr Williams negotiated the transaction on behalf of the ING Office Fund.
"Given the average passing rent is around $191sq m, about half the current market level, there is significant growth potential," he said in a statement.
Mr Williams revealed GDI would work together with Fortius in the asset management of the property to unlock its value as the existing leases matured over the next five years.
GDI specialises in acquiring property to refurbish, strata title and sell off.
ING's big deal comes hot on the heels of GE Real Estate, which sold its 14-storey St Georges Centre office tower at 81 St Georges Terrace to Macquarie Bank for $42.2 million last week, almost doubling its investment in just 18 months.
