GPT looks to raise $850m

GPT looks to raise $850m

21 June 2019

Diversified property group GPT has thrown its full weight behind Sydney’s booming office sector with the acquisition of a significant stake in the $2 billion Darling Park and Cockle Bay retail complex at Darling Harbour, reports The Sydney Morning Herald.

GPT will tap investors for $850 million to fund the deal, which encompasses Darling Park Tower 1, leased by the Commonwealth Bank, and Tower 2, the home of IAG, and a majority stake in the proposed $1 billion, 40-storey office skyscraper at the front of the existing Darling Park towers.

The move also opens the way for GPT to drive the development of the planned $2bn fourth tower at the complex as the area is overhauled, with Lendlease completing a new precinct, Grocon building a W Hotel and Mirvac readying to overhaul the Harbourside shopping centre, reports The Australian.

Macquarie Capital and UBS have been hired to oversee GPT’s deal.

Demand for Australian REITs has already seen Dexus and Mirvac raise more than $1.5 billion between them this quarter.

GPT’s chief executive, Bob Johnston, said the public space will cover the area of the Western Distributor that currently separates much of Darling Harbour from the city. It will turn dead space above the freeway into a new public and green space.

“Apart from improving the connection across the Western Distributor, the development will include enhanced entrances on Market and Druitt Streets improving the connections to Town Hall Station and the planned light rail and Metro stations,” Mr Johnston said. There will also be new restaurants along the Cockle Bay wharf.

Mr Johnston said the acquisition reflects the group’s confidence in the Sydney office market where the vacancy rate for premium space is at a record low 3.2 per cent. It will boost the group’s exposure to the Sydney office market to 59 per cent.

“We are confident of further rental growth in the Sydney and Melbourne office markets and the deal also gives us exposure to development opportunities with our interest in the planned fourth office tower,” Mr Johnston said.

The deal is on an initial yield of 5.3 per cent and the raising is at $6.07 per GPT security, representing a 4.1 per cent discount to its last closing price of $6.33.

Upon completion of the deal, GPT and its unlisted wholesale office fund GWOF will hold a combined 75 per cent of the complex. GWOF owns 100 per cent of Tower 3.

Of the funds raised, $531 million will be used for the new acquisition, with the remainder financing the next stage of growth from within the group’s $1.5 billion ongoing development pipeline across the office and logistics sectors.

GPT also had a busy pipeline of industrial projects, including facilities at Truganina in Melbourne and a complex at Wembley Business Park, Brisbane. GPT also expects to start the new office and retail development at Melbourne Central next year.