Monthly Archives: December 2018

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Lloyd Williams sells city car park to Hong Kong investors for $120m

Property tycoon and horse racing identity Lloyd Williams has more than doubled his money with the sale of a 16-storey carpark in Melbourne’s Flinders Street to a Hong Kong private company for about $120 million.
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The multi-storey car park at 114 Flinders Street is the first Melbourne asset acquired by HK Realway, a family-run Hong Kong property investment business headed by Ling Wong and Yun Choi.

The building has a height restriction on the land title preventing it from being developed and intruding on the views of top-end tenants in the upmarket 101 Collins building located behind in Collins Street.

Market sources say 114 Flinders fetched around $120 million, selling on unconditional basis with no due diligence on a yield around 5 per cent.

It includes an 864-space car park and offices leased by the Australian Housing and Urban Research Institute and Consulate General of Rwanda among others.

Mr Williams has held the property under a company called Cavehall after purchasing it for $54.5 million 10 years ago.

CBRE’s Mark Wizel, Kieran Pillai, Lewis Tong and Knight Frank Martin O’Sullivan handled the transaction.

Eu Ming Lim of Thomson Geer Lawyers confirmed his client HK Realway acquired the asset shortly after the close of a competitive bidding process last Friday.

HK Realway has been quietly building a property portfolio in Australia.

They own several properties in Sydney, including an office tower at 140 Arthur Street that was purchased from fund manager CorVal for $58 million two years ago, the Cinema Centre Car Park in the CBD and another office tower at 309 George Street they purchased for $112.3 million.

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G8 Education taps investors for $100m

G8 Education is tapping investors for $100 million through a fully underwritten institutional placement to fund growth opportunities and reduce debt on the same day the company’s long-time boss Chris Scott has announced his retirement.
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In a trading update, the childcare centre owner also said it has terminated the second tranche of the placement with the Chinese group CIPI, part of G8’s previous plans to expand into China.

The deal comes as property investors have ear-marked the childcare sector as one of growth, with more than $120 million worth of properties bought in the past year.

“Following a review of the market, G8 has elected, at this time, not to pursue any opportunities in relation to the early education sector in China,” managing director Gary Carroll said.

“It was surprising and disappointing that CIPI did not fulfil its payment obligations under the share placement.”

CIPI settled tranche 1 in February, which equalled $63 million, but has reneged on tranche 2, which amounted to $149 million

The G8 directors have now amended tranche 2, with CIPI now committing to subscribe for 8.2 million shares at a price of $3.88, representing $31.8 million of proceeds to G8. Settlement is expected to occur before 20 July, however, if CIPI fails to settle by that date G8 has the right to sell tranche 1 shares to satisfy the settlement.

The placement price, underwritten by UBS and Ord Minnett, will be determined via a variable price bookbuild with a floor price of $3.10 and a maximum price of $3.20, which represents a discount of 7.2 per cent to 10.1 per cent.

Mr Carroll said the funds raised will strengthen the balance sheet through repayment of the $50 million bond as well as the $40 million drawn under the Bankwest working capital facility.

It will also partly fund the committed child care centre acquisitions in Australia as announced in February. These acquisitions total about $200 million and are expected to settle between now and mid???2019.

According to brokers at Petra Capital, on a rolling 12-month basis G8’s like-for-like occupancy as at the end of April was 77.7 per cent, down 3.4 per cent from the prior corresponding period due to industry supply increases, weaker demand in select markets and centre???specific issues.

The impact of lower occupancy has been offset by price increases as well as strong cost control which, through active management, have resulted in an improvement in underlying earnings margins.

“The pace of acquisitions has been slightly impacted by some delays in development processes, with the resulting EBIT impact from 2017 acquisitions now expected to be about $4 million below the previously stated $7 million forecast,” the brokers said.

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Charter Hall snaps up Dexus site for $229m

Charter Hall’s Prime Office Fund and Direct Office Fund have extended their joint venture with the exchange of contracts with Dexus Property to buy the office tower at 105 Phillip Street, Parramatta, Sydney, for $229 million.
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The property is a fit-for-purpose, 25,000 square metre A-grade office tower that has been pre-committed on a 12-year lease with Property NSW. As part of the sale agreement, Dexus is responsible for delivering the development and will be the property manager for five years after its completion in mid-2018.

The Bates Smart-designed tower will be the new home of the NSW Department of Education when it moves out of the Lands and Education Buildings, collectively known as The Sandstones in Bridge Street, Sydney. Built Pty Ltd will construct the new asset with a 5-star NABERS Energy and 4-star NABERS Water rating as well as a 5-star Green Star rating.

Alongside the new asset, Charter Hall is also a large developer with its $220.5 million 1PSQ, which is the first project to begin construction as part of Parramatta City Council’s Parramatta Square vision.

The facility will be the new CBD campus of Western Sydney University and includes 14 levels of A-grade commercial space over 26,500 sq m.

Adrian Taylor, the group executive – office at Charter Hall, said the opportunity to acquire this asset “is consistent with our strategy of acquiring assets with a long weighted average lease expiry (WALE), leased to strong tenant covenants underpinning high-quality cash flow in strategic locations”.

“The market is extremely competitive for high-quality long WALE investment assets, particularly leased to blue chip tenants,” Mr Taylor said.

“We see this investment, which extends our relationship with the NSW government as a tenant customer, as an exciting opportunity to create another landmark office tower in Parramatta CBD, which will benefit from significant infrastructure upgrades and which is proving to be increasingly attractive to tenant customers.”

The sale is the remaining 2017 trading property asset from Dexus and alongside Parramatta, other trading projects that have been sold and contribute to the financial 2017 trading profits include 57-65 Templar Road, Erskine Park, which settled on July 1, last year and 79-99 St Hilliers Road, Auburn, which settled on January 31 this year.

In Melbourne, Dexus has received a planning permit for a residential scheme at 32 Flinders Street, which is currently a car park.

According to a new report by PricewaterhouseCoopers (PwC), Parramatta’s economic growth is set to almost double over the next five years and the city is on track to become a leading financial hub.

The Parramatta 2021 report, commissioned by the City of Parramatta, found the economy of Sydney’s dual CBD will grow by $7 billion by 2021, to $30 billion.

Knight Frank leasing director Tom Bartlett said with an overall vacancy rate at Parramatta of only 4.3 per cent and no direct vacancy at all in prime-grade stock, average gross prime rents have increased 5.6 per cent during the past 12 months to average $580 per sq m or $469 per sq m net. Incentives have continued to fall across the board, down to 18.4 per cent from 21.5 per cent a year ago.

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Australians targeted by Amazon spam scam

Australians have been targeted by scammers purporting to be the retail giant Amazon and promising them $500 Amazon vouchers.
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The scammers used Amazon’s well-publicised expansion into Australia as a hook.

???People at the weekend received a legitimate-looking email offering $500 Amazon vouchers to those who clicked on a link and provided feedback on the company.

The email’s subject line was, “Amazon Card for you. Confirm before it expires.” The email featured the Amazon logo, and a cartoon of a man holding a clipboard in front of a bus, with an arrow and the words ‘Confirm my voucher’ running across the picture.

The email says the “expansion of Amazon into Australia is fast approaching. We will soon begin operating brick and mortar distribution and retail centers [sic] in all states across Australia.”

It continues, “Of course, Aussie consumers are no strangers to Amazon. In the past few years we have built strong relationship with you and we are here to say thank you!

“In order to express our gratitude towards Aussie consumers, we are coming to you with a $500 Amazon Voucher.

“We have 80 Vouchers to give away this weekend. All you need to do is: Confirm receiving this email by clicking here. Give us your opinion about Amazon.

“That’s simple, right?

“Thank you and Good luck!”

The email was signed off by “Your Prime Team,” referring to Amazon Prime, Amazon’s membership offer which provides fast shipping to members.

While the email stated it had been sent to people who had “subscribed to offer emails”, recipients included people who had never ordered anything from Amazon or signed up for a membership.

Delia Rickard, deputy chairman of the Australian Competition and Consumer Commission, said seven people had reported the “genuine-looking” scam to the watchdog – and none had clicked on the link.

“One of the things that scammers are good at is piggy-backing on a topical event,” she said.

She said it was unclear whether the scam was motivated to spread malware, or to trick people into giving out private information that could be used for identity theft or onsold to other scammers.

The watchdog advises people people to verify whether an offer is legitimate by “checking if it is listed on the retailers’ official website or by calling the retailers’ official customer service line.”

Amazon’s public relations firm Weber Shandwick declined to comment. Amazon’s Australian plans

After Fairfax Media broke the news of Amazon’s Australian expansion plans in 2016, Amazon confirmed its plans in April and promised thousands of new jobs, millions in additional investment, and to “empower small Australian businesses through Amazon Marketplace”.

While Amazon is known for its online marketplace, it has been investing in bricks and mortar stores too.

As at last month, it had six bookstores (soon to be 12), pop-up stores, college pick-up points, and a convenience store without checkouts that is being tested in Seattle. Its finance chief last month described bricks and mortar physical stores as “another way to reach the customer”.

International sales accounted for 32 per cent of Amazon’s sales for the three months to 31 March. International sales were up 16 per cent year-on-year but continued to be unprofitable.

Amazon has been pouring big money into international expansion, particular in India. Its capital expenditure surged 51 per cent year-on-year, primarily due to investment in fulfilment centres, or large warehouses.

Amazon operates its online grocery delivery service Amazon Fresh in 21 cities in the US as well as London and Tokyo, which opened last month.

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West Melbourne roars into record territory

Melbourne developer United Asia Group has put its foot on a West Melbourne development site, setting a new land benchmark for the area.
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UAG, led by Nicole Chow, snapped up the three-storey motel at 45-55 Dudley Street, paying a speculated price around $19.5 million or a per-square-metre rate of around $15,000.

Land rates in West Melbourne have been fetching around $12,000 per square metre, a rate paid by developer Bill McNee for a neighbouring Dudley Street site.

The sale of the Flagstaff City Inn, an owner-run hotel, was executed by Savills Australia agents Clinton Baxter, Benson Zhou and Jesse Radisich.

“It achieved an unprecedented land rate for West Melbourne, which is indicative of offshore developers’ desire to cater for burgeoning demand,” Mr Baxter said.

It is just across the road from Tim Gurner’s Ikebana project where all 241 apartments were pre-sold in four weeks and next door to VicLand’s 38-level tower on the corner at 420 Spencer Street. All its 438 apartments in the tower have sold out.

West Melbourne, on the city fringe, has been steadily developed over the past 15 years but the most recent deal has reached a new level.

Mr Baxter said the West Melbourne market “had sat idling” for some time but it was now moving.

Listed developer Abacus recently purchased an office furniture warehouse and showroom at 512-544 Spencer Street, and has formed a joint venture to develop the block-length site.

Closer to the CBD Chinese developer Holder East recently paid about $25 million for an 1877-square-metre car park at 496-508 La Trobe Street.

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