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Vol 11. No.26

Economic Overview

	Current	+/-	Movement
$AUS/$US	86.64	-0.04
Cash Rate	3.75	Steady
90 Day Bill	4.18	+0.06
10 Year Bond	5.410	+0.0025
ASX 200	4521.4	+7.3

NSW Property

Carlton United Brewery site update (AFR Pg.57)

• The $2 billion redevelopment of the former Carlton United Brewery (CUB) site in Broadway, Sydney is set to commence immediately.
• The NSW Planning Department has given permission for a 6,500m² public park to be named Central Park.
• The CUB project is expected to take 8 to 10 years and will include 1,550 apartments.
• Off-the-plan sales are expected to commence in April or May and the next building project will be launched within a few months.
• Frasers Property Australia purchased the site for $208 million in July 2007 and spent 18 months gaining approval for the concept plan.

State Street relocation (AFR Pg.55)

• State Street is moving their Australian headquarters to the $400 million tower being developed by Fortius Funds Management and the Lend Lease-managed Australian Prime Property Fund in George Street, Sydney.
• State Street has signed a 10 year lease for 10,500m² over levels 10 to 17 with an option for a further 2 floors.
• Rent is estimated at approximately $650/m² net with an incentive of up to 30%.

Westfield anchor tenant confirmed (AFR Pg.55)

• JP Morgan has been confirmed as the anchor tenant for Westfield’s office tower development at 85 Castlereagh Street, Sydney.
• JP Morgan will occupy 16,700m² when construction is completed in mid-2012.
• The deal is believed to contain an incentive of more than 25% and rent of more than $800/m².

Victoria Property

• Finbar and Wembley Lakes Estate have purchased 6 - 14 Welshpool Road and 185 – 189 Swansea Street, East Victoria Park for $9.3 million.
• The 1.5 ha ($620/m²) site can be developed into 95 residential apartments ($97,895/unit) and a 6,200m² showroom/office.

Melbourne office tower sale (AFR Pg.57)

• Trinity Stapled Trust and the unlisted Trinity Property Trust have sold 383 King Street, Melbourne to Henkell Brothers Australia for $34 million ($2,620/m²) on an approximate yield of 8%.
• The 12,975m² office tower is currently leased to National Australia Bank until May 2013.
• The sale price is in line with valuation. The property was purchased in 2006 for $41.2 million.

• Two large prelease deals have been reached in Pellicano’s M2 business park in Dandenong South.
• Applied Australia has preleased a 3,700m² facility for 8 years.
• A&L Windows has precommitted to 11,500m² for 12 years.

National Property

DFO update (AFR Pg.54)

• The owners of Direct Factory Outlets are seeking a buyer or institutional investor.
• The portfolio includes 8 DFOs and 3 homemaker centres.
• There are also plans to upgrade a centre in Spencer Street, Melbourne into a premium grade centre.

Shopping centre update (AFR Pg.56) 

• Shopping centre sales are forecast to increase in 2010 due to the stabilisation of yields and recent major transactions suggesting confidence has returned to the market.
• Offshore investors accounted for 17% of asset acquisitions in 2009 and this figure is expected to rise this year.
• Few new developments are unlikely to commence this year due to the inability to obtain finance, however, refurbishments and extensions are anticipated.
• The amount of new supply due in 2010 is 397,000m² half the level released in 2009 and well below the 10 year average of 632,000m² .
• The majority (26%) of completions in 2009 were in Melbourne.