ASX-listed Irongate Group has acquired an industrial business park in Perth and a stake in a grade-A office building in Melbourne for a combined $156 million.
Irongate snapped up a 50% interest in the office building at 510 Church Street, Cremorne in Melbourne for $130 million, reflecting an initial yield of 4.7%.
The Cremorne property comprises 19,798 sqm of lettable area across nine levels of office accommodation, ground floor retail and 145 car parks.
It has a current occupancy rate of 76% with a 7.5-year WALE and is anchored by Dentsu, Monash IVF and the Commonwealth Government’s National Disability Insurance Scheme, who together account for 59% of income.
It also has been designed to achieve a 5-star NABERS energy rating and 5-star Green Star Design rating.
The buyer also acquired the industrial business park at 16 Aspiration Circuit, Bibra Lake in Perth for $26 million, equating to an initial yield of 5.8%.
The property is fully leased with 16,861 sqm of lettable area across eight warehouses in addition to 296 car bays.
Irongate Group CEO Graeme Katz said the yield on the Perth acquisition provided an attractive spread to the eastern seaboard states, where industrial assets were currently commanding yields of 4% – 4.75%.
“Recent transactions indicate that this spread will compress as investors shift their focus to the higher yields on offer in the Western Australian industrial market,” Katz said.
On the Melbourne deal, Katz said the Cremorne Property provided them with an opportunity to improve the overall quality of the portfolio in a market they were familiar with.
“There is strong interest from high-quality tenants to lease the vacant space, particularly given the quality of the Cremorne Property and its desirable location,” the CEO said.
To partially fund the Melbourne deal, Irongate announced a fully underwritten institutional placement to raise about $50 million at an issue price of $1.55 per stapled security.
Irongate has purchased a handful of office and industrial assets in 2021, including a Brisbane office building for $36 million in August.
The company bought a Canberra office building for $73.75 million in June, in addition to two Brisbane industrial properties in April.
It also acquired a Brisbane industrial property for $24.75 million in March.