University of New South Wales Agrees to $41 Million Sale Leaseback of Campus Building

Australian Property Review - December 18, 2006

The Westpac Office Trust has contracted to acquire a University of New South Wales (UNSW) office and educational building in Kensington, Sydney, for $41 million. The university will lease back the entire building for an initial term of 25 years.

The purchase, the third for the Trust, involves the acquisition of a 99 year ground lease interest in the 10,685 sqm property. The lease back agreement includes two further options of ten years each. The lease provides for fixed 3% per annum rental adjustments and is 'triple net', with UNSW responsible for all capital and operating expenses. The purchase price of $41 million is supported by an independent valuation from CB Richard Ellis at an initial yield of 6%, a ten year discount rate of 8.5% and a terminal capitalisation rate of 6.1%.

The building, located at 221-227 Anzac Parade in Kensington, lies adjacent to the UNSW campus and was completed in May 2005. It was design by Bligh Voller Nield.

"The property will add diversity to the portfolio and meets the investment criteria of the Trust in offering a long term, investment grade equivalent, covenant from UNSW and a new building in a location that will improve significantly in the future," said Keith Grayson, Head of Property Funds Management for Westpac. Sphere: Related Content