The office building was sold in late April to Sydney-based investment manager Realmont Property Partners on behalf of UD Australia Pty Ltd for 21 per cent above the previous valuation of the property.
Built in the 1970’s as a research and development facility the building was retrofitted in 2009 with an environmentally sustainable design and leased to the Environment Protection Authority and Trinity College, a subsidiary of Melbourne University with a remaining average lease expiry of circa. two years.
Nikki Panagopoulos, Fund Manager, Diversified Property Fund said the sale was an excellent result for investors in the current environment with the sale price 21 per cent above the property’s previous valuation of $59.20 million.
“The sale outcome, in the face of a market downturn, is testament to the quality of the Fund’s assets and an example of our ability to deliver value for investors over the long term, she said.
“The sale reduces the overall leasing risk profile of the Diversified Property Fund, increasing its weighted average lease expiry to 7.7 years from 7.1 years before the sale.
“Despite the challenging headwinds facing most parts of our economy, DPF is well diversified by sector and geography. It’s assets are well-located and leased with 70 per cent of its income secured against credit-rated government covenants with listed, local and global corporations.
Commenting on the likely impact of the Federal Government’s Mandatory Code of Leasing Principles on the Fund’s income, Ms Panagopoulos said it was too soon to provide specific details and that Australian Unity was working closely with tenants that needed support as a result of the effects of COVID-19.
“Our efforts remain focused on working with our tenants to deal with the effects of the pandemic and deliver an equitable outcome for both our tenants and investors during this period.”
Investors in DPF will receive a special capital distribution which will be in addition to the Fund’s regular, quarterly income distribution payment, to be paid in July 2020.
The DPF’s total return for the three months to March 2020 was 3.91 per cent, its one year return was 9.65 per cent and its five year return 14.49 per cent pa as at 31 March 20201.
Units in the Australian Unity Diversified Property Fund are issued by Australian Unity Property Limited ABN 58 079 538 499, AFS Licence No 234455 in its capacity as the responsible entity of the fund.
Information provided here is general information only and current at the time of publication and does not take into account the objectives, financial situation or needs of any particular investor. In deciding whether to acquire, hold or dispose of the product you should obtain a copy of the Product Disclosure Statement (PDS) and seek professional financial and taxation advice.
1Returns are calculated after fees and expenses and assume the reinvestment of distributions. Past performance is not a reliable indicator of future performance.