79 – 83 High Street Kew

This well located office building was purchased for a private client in June 2019 for $19.0 million. Terraplex is acting as Trustee and Asset Manager of the Fund.

The property

Features of the property at the time of purchase included:

Two storeys of office accommodation with 3,361m2 NLA that has been sub-divided into 19 lots with an average area of 175m2.
90% leased to thirteen tenants with varying lease expiries and a 2.5 year WALE (by income) which provides a secure cash flow and risk diversity against major vacancy.

Secure ground floor with basement car parking providing for 112 car parking spaces.
Outstanding suburban office location 100 metres from Kew Junction and 2 km CityLink and Eastern Freeway interchange.

The investment

The investment strategy highlighted the need to:

The investment strategy identified at the time of purchase highlighted the opportunity to capture significant rent reversion and value gains when leases expire given the below market passing rents. Also to assess further re-development potential (STCA) as the property’s location and significant site area and zoning provides opportunity to add more office space on balcony areas and on the roof.

Asset management initiatives include obtaining Development Approval for the construction of two additional levels on the roof adding 2,140m2 (68% increase) of additional office space. The Permit has added significant value to the property, and we are delighted to report the independently assessed value of the property has increased to:

“As Is” – $22,700,000 representing a 19.5% increase to the purchase price 2)
“As If Complete” – $44,160,000

The cost of the works is estimated to be $15.0 million.

Performance to date
Address	79-83 High Street, Kew
Purchase Price / Date	$19.0m / June 2019
Current Valuation	$22.70m / Aug 2021
Acqn Date	5 June 2019
Lettable Area	3,361 m2
Passing Net Income (at Acqn)	$0.95 M pa
Est Fully Leased Net Income	$1.1 M pa
Equity Raised	$11.0 M