Irongate Group, the Australian real estate investment trust (Reit), has acquired an office property in Canberra in an effort to own more properties with long leases in place..
The JSE-listed company, which was formed by the Investec Group and listed on the main bourse in 2013, said on Monday that it would buy the property at 38 Sydney Avenue for A$73.75m (R782m), at an initial yield of 5.13%. The deal will bring in regular income payments to Irongate.
The property, which comprises accommodation across four levels, is 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 and annual fixed rent reviews of 3.5%.
The balance of the office space is subject to a 24-month non-refundable gross rent guarantee provided by the vendor.
“This transaction builds on IAP’s track record of acquiring strategically located, good quality income-producing properties,” Irongate CEO Graeme Katz said.
In the past two years, A$12.6m was spent on refurbishing the property, including a full atrium lobby upgrade, the addition of end-of-trip facilities and floor amenities.
“The Canberra office market proved resilient through the Covid-19 pandemic, underpinned by the government sector,” Katz said.
Irongate also announced that it had raised A$50m (R530m) that will partly be used to fund acquisitions. Katz said the institutional placement would improve the group’s financial position.
“The placement, the proceeds from which will be used to partly fund the acquisition, provides Irongate with the opportunity to increase liquidity while preserving balance sheet capacity for future growth,” he said.
After the acquisition and placement, the company’s gearing will be 30.6%, at the lower end of its target range of 30% to 40%.
The acquisition is due to be completed on June 29.
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