The Australian Financial Review - 15 -16 December, 2007.

APT may go to town at Investa pre-Christmas sale
Mathew Dunkley

Concerns over rising debt and a possible peaking of the commercial property market have not dented Investa Property Group's pre-Christmas mega-sale, with a group of government tenanted buildings set to sell for more than $350 million.

Investa's new owner, Morgan Stanley, put more than $1.3 billion of the company's assets on the market just after it got the keys earlier this year.

News on the sale's progress has been scarce, but word is that fledgling funds management business Australian Public Trustees is in advanced negotiations to buy a quartet of properties from the portfolio.

Well-placed sources said it was likely Melbourne-based APT would place the assets in its Government Property Trust, its largest vehicle.

Such a transaction would massively boost the size of the fund from its current $112.5 million.

It is believed the deal will probably be struck on a yield of close to 6 per cent, which would be of interest to property observers who have been closely watching the portfolio sale for any signs of weakness in the market.

The buildings APT is believed to want are 595 Çollins Street and 414 La Trobe Street in Melbourne, the state Law building at 50 Ann Street in Brisbane, and Canberra's 62 Northbourne Avenue.

The Collins Street building is half-owned by one of Investa's managed wholesale funds, which did not enforce its pre-emptive right to buy out the building but will retain its 50 per cent share.

The buildings' tenants include Medicare, the Australian Taxation Office, the Workplace Authority, the Queensland government and the federal Department of Transport and Regional Services.

The total floor area for the four buildings is 81,000 square metres.

APT was not willing to talk on Friday. The portfolio sale is being run by Colliers International and CB Richard Ellis but they also declined to make any comment.

Further deals out of the sale process are likely to be announced in the coming week, with Investa's wholesale funds thought to have taken up their pre-emptive rights on a number of buildings.

Investa's group executive, investment portfolio, Campbell Hanan, said the sale process was proceeding well but refused to elaborate any further.