30 Pirie St, Adelaide. Image – AOF.
  • Valuation represents a like for like reduction of $10.7M
  • Portfolio weighted average capitalisation rate of 5.85%
  • Potential merger on the cards

Australian Unity Office Fund (ASX: AOF) has released the preliminary valuations of its eight asset portfolio.

Coming in at $639 million, the company said it is a “like for like reduction of $10.7 million and a portfolio weighted average capitalisation rate of 5.85%. The net valuation movement principally relates to an $18 million decrease in the value of 30 Pirie Street, Adelaide and an $8 million increase in the value at 2 Eden Park Drive, Macquarie Park.”

“We are pleased to confirm the upper end of the FY21 FFO guidance range reflecting strong collections and positive leasing outcomes throughout the year. Our focus into FY22 will include delivering on AOF’s refined strategy and executing on our active asset management and refurbishment programs, enabling AOF’s assets to continue to meet tenant requirements.”

Nikki Panagopoulos, AOF Fund Manager

While Macquarie Park is at 100% occupancy, 30 Pirie Street in Adelaide will soon see upgrades.

Potential merger

The idea of a merger with the Australian Unity Diversified Property Fund (DPF) was floated.

Following a strategic assessment, Australian Unity Investment Real Estate Limited (AUIREL) Chairman, Peter Day, said:

“After exploring the various options, the Board has identified a potential merger of AOF and DPF as a key initiative to deliver on the refined strategy.”

Peter Day, AUIREL Chairman

The combined portfolio, should AOF and DPF merge, will include 18 assets, worth just under $1.2 billion across office, convenience retail, and industrial sectors.

Image – AOF.

The portfolio would have an occupancy of approximately 96% and a weighted average lease expiry (WALE) of approximately 4.8 years.

Without the merger, AOF would have a 95.3% occupancy and WALE of 2.6 years, DPF an occupancy of 97.4% and WALE of 7.6 years.

A combined portfolio would also see WA in the mix.

Image – AOF.

The diversity of tenants will also increase.

Image – AOF.
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