The Financial Review, 31 July, 2007.

Public Trustees bags four bargains
Mathew Dunckley

A clutch of four properties spread across three states is the latest addition to Australian Public Trustees government property investment vehicle.

The acquisitions consist of tenanted office buildings in Adelaide and Darwin and a vacant office building and a development site in Newcastle.

The properties were bought for just under $24 million, but APT chief executive Darren Olney-Fraser said that when the assets were tenanted and developed they would be worth almost $70 million, assuming a capitalisation rate of 7 per cent. That would take the Government Property Trust’s assets past the $200 million mark.

The most significant move was in Newcastle. The trust bought an office building at 464 King Street and was now in the final stages of a tender process that could land a government tenant.

The Dangar Street development site, also in Newcastle, would be pitched at public sector tenants and a precommitment would be required before construction of the proposed 11,000 square metre building.

Mr Olney-Fraser said: “We are looking around the different markets for where governments are going with their office space and Newcastle is a booming government office town … a lot of government jobs are moving there.”

The South Australian acquisition was of a Centrelink-tenanted building at 30 Gawler Street, Salisbury, worth $5.98 million. The Darwin property, 9 Scaturchio Street, Casuarina, was worth $9.74 million and tenanted by a number of health services providers.

The deals were fully debt-funded and took the trust’s gearing to about 72 per cent.

Mr Olney-Fraser said: “We are gradually growing the trust to get ourselves to the point where we can list it, in about 12 months, with over $300 million in assets.” The trust aimed to secure properties on yields of about 8 per cent by targeting small to medium buildings in regional spots.