commonwealth property office fund (cpa) · neither commonwealth bank of australia (the ‘bank’)...
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Responsible Entity: Commonwealth Managed Investments Limited ABN 33 084 098 180 AFSL 235384 Registered Address: Ground Floor, Tower 1, 201 Sussex Street Sydney NSW 2000 Australia Principal Office of the Manager: Level 4, Tower 1, 201 Sussex Street Sydney NSW 2000 Australia Telephone: 02 9303 3500 Facsimile: 02 9303 3622
Colonial First State Property Limited ABN 20 085 313 926
Manager of Commonwealth Property Office Fund
10 April 2013
COMMONWEALTH PROPERTY OFFICE FUND (CPA) Asset acquisition and upgrade to FY13 distribution guidance Commonwealth Managed Investments Limited (CMIL), the Responsible Entity of Commonwealth Property Office Fund (CPA or the ‘Fund’), has today executed the Fund’s first right on a 25% interest in 201 Kent Street, Sydney with the simultaneous exchange and settlement of contracts. The 25% interest was acquired from Colonial First State Global Asset Management Property’s Direct Property Investment Fund (DPIF)1 which is a closed-end wholesale vehicle in wind-up mode. The transaction was executed at the December 2012 independent valuation adjusted for book value movements to 10 April 2013. This resulted in a purchase price of $77.3 million (25% interest) reflecting a capitalisation rate of 7.38%, and increases CPA’s stake in the asset to 50%. Charles Moore, CPA Fund Manager, said: “CPA has held a 25% interest in 201 Kent Street since 2000, so it is an asset that we know well and we have great comfort in its longer-term investment fundamentals. By increasing our stake to 50%, we provide immediate accretion for our investors.” “In conjunction with today’s acquisition, we are pleased to be able to upgrade our distribution guidance from around 6.40 cents per unit to 6.55 cents per unit for the 2013 financial year,” said Mr Moore. Acquisition rationale and portfolio impact
• Immediately accretive to unitholder returns • Close proximity to new Barangaroo precinct will improve local amenity and potentially drive total
return upside • Increases the Fund’s weighting towards the Sydney CBD • Solid weighted average lease expiry (WALE) of 4.5 years, close to the portfolio WALE of
4.7 years, and • High occupancy of 98.4%2 and limited expiries over the short-term.
Mr Moore added: “The acquisition has been funded entirely from undrawn debt facilities, which provides accretion to unitholder returns from day one. Combined with the development expenditure of 5 Martin Place in Sydney, this transaction will increase CPA’s gearing to around the middle of the Fund’s target gearing range of 25% to 35% by late 2014.” A summary of changes to key statistics for CPA follows:
Pre-acquisitiona Post-acquisitionb Gearing 25.1% 26.7% Prime assets (% portfolio) c 89.3% 89.5% NSW assets (% portfolio) c 44.4% 45.4% WALE d 4.7 years 4.7 years Portfolio occupancy rate d 96.6% 96.6%
a. Based on financials and portfolio data, as at 31 December 2012. b. December 2012 data adjusted for the acquisition of a 25% interest in 201 Kent Street, Sydney. c. By value. d. By income.
1 CPA acquired DPIF’s 50% interest in units held in Kent Street Trust. Kent Street Trust owns 50% of 201 Kent Street, Sydney. 2 By income.
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201 Kent Street, Sydney Originally developed in 1988, 201 Kent Street provides 34 levels of office accommodation and four retail tenancies, with a net lettable area of around 39,900 sqm and parking for 265 cars. The building has frontages to Kent Street, Napoleon Street and Hickson Road. The acquisition price also includes a 25% interest in a historic five-level warehouse known as Grafton Bond Building which has been restored and provides boutique office accommodation. The property has a 4.5-star NABERS Energy rating and a 4.0-star NABERS Water rating. The asset’s relatively high car parking ratio is highly desirable given the limited number of spaces that will be provided in the Barangaroo precinct. As at 31 December 2012, the asset was 98.4% occupied3 with a well-diversified mix of 21 office tenants across a range of sectors, which include AON Corporation Australia, Kellogg Brown & Root, Arup, Austrade, Aberdeen Asset Management and Knight Frank. For more details on 201 Kent Street, Sydney, refer to the attached property profile.
ENDS
For further information please contact: Charles Moore Angus McNaughton Fund Manager Managing Director, Property Commonwealth Property Office Fund Colonial First State Global Asset Management Phone: +61 2 9303 3438 Phone: +61 2 9303 3765 Email: [email protected] Email: [email protected] Investor and media contacts: Penny Berger Mathew Chandler Head of Investor Relations and Communications Investor Relations and Communications Manager Colonial First State Global Asset Management Colonial First State Global Asset Management Phone: +61 2 9303 3516 or +61 402 079 955 Phone: +61 2 9303 3484 or +61 407 009 687 Email: [email protected] Email: [email protected] About Commonwealth Property Office Fund CPA is an office sector-specific Australian Real Estate Investment Trust (A-REIT) which invests in prime quality office property located in central business districts and major suburban markets across Australia. The Fund is managed by entities within CFSGAM Property on behalf of more than 22,000 investors from 23 countries. At 31 December 2012, the Fund comprised 26 assets with a total asset value of $3.8 billion. About CFSGAM Property CFSGAM Property is the specialist property division of Colonial First State Global Asset Management, and is one of the largest real estate fund managers in Australia with $17 billion in funds under management. CFSGAM Property offers a fully integrated real estate investment platform including investment management, asset management, development management, origination and execution. CFSGAM Property manages a suite of wholesale investment products, as well as three listed real estate investment trusts in Australia and New Zealand.
3 By income. Vacancy rate by area is 97.9%.
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201 Kent Street, Sydney
Property profile as at 31 December 2012
The property comprises an office building over 34 levels and the five-level heritage listed Grafton Bond Building, with associated car parking and ground floor retail. The property is located in the western corridor of the Sydney CBD with frontages to Kent and Napoleon Streets and Hickson Road.
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201 Kent Street, Sydney
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Property details as at 31 December 2012
Property details
Location 201 Kent Street, Sydney NSW
Date acquired December 2000
CPA ownership (%) 25
Property breakdown
Area (NLA)(sqm) % NLA % Income
Office 39,251 98 85
Retail 631 2 3
Car park 265 spaces – 10
Other – – 2
Total 39,882 100 100
Typical floor plate 1,325-1,740
Valuation
Valuation ($m) 78.0
Valuation date Dec 2012
Capitalisation rate (%) 7.38
Discount rate (%) 9.00
Terminal yield (%) 7.50
Book value ($m) 85.3^
Income (six months to December 2012)
Net income to CPA ($m) 1.8^^
Major tenants
% NLA Expiry date Next major review date
AON 27 Jun 2022 Jul 2013
Kellogg Brown & Root 9 May 2015 Jun 2013
Arup 9 Sep 2015 Oct 2013
Office statistics
Vacancy (area) (%) 2.1
Average passing rent (occupied office) ($/sqm)*
696
Over/(under) renting (%) 1.0
Weighted average lease term by income (years)
4.5
Review type for six months to Jun 2013 (by area)
12,613 sqm – 100% fixed
Outgoings – statutory ($/sqm) 17
Outgoings – non-statutory ($/sqm) 87
Outgoings – recoverable (%) 90
Gross leases (area) (%) 9
Net leases (area) (%) 91
NABERS Energy rating 4.5-star
NABERS Water rating 4.0-star
^ Representing the value of units in Kent Street Trust. ^^ Representing distributions from Kent Street Trust. * Represents base rent plus recoveries, including increases over base years.
Lease expiry profile by income
* Six months to June 2013 and includes vacancies and holdovers.
5.8
12.7
31.0
8.9 5.2
36.4
0
5
10
15
20
25
30
35
40
45
50
FY13* FY14 FY15 FY16 FY17 Beyond
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Disclaimer
Neither Commonwealth Bank of Australia (the ‘Bank’) ABN 48 123 123 124 nor any of its subsidiaries guarantees or in any way stands behind the performance of the Commonwealth Property Office Fund (CPA or the ‘Fund’) ARSN 086 029 736 or the repayment of capital by CPA. Investments in CPA are not deposits or other liabilities of the Bank or its subsidiaries, and investment-type products are subject to investment risk including possible delays in repayment and loss of income and principal invested.
The information contained in this document (the ‘information’) is intended to provide general advice only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider talking to a financial adviser or consultant before making an investment decision.
All reasonable care has been taken in relation to the preparation and collation of the information. Except for statutory liability which may not be excluded, no person, including Commonwealth Managed Investments Limited (CMIL or the ‘Responsible Entity’) ABN 33 084 098 180, Colonial First State Property Limited ABN 20 085 313 926 or any other member of the Bank’s group of companies, accepts responsibility for any loss or damage howsoever occurring resulting from the use of or reliance on the information by any person. Past performance is not indicative of future performance and no guarantee of future returns is implied or given.
Copyright and confidentiality The copyright of this document and the information contained in it is vested in the Responsible Entity, the Bank and the Bank’s group of companies.
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