Mirvac (ASX: MGR) announced (link opens as PDF) Monday that it has sold a 50% stake in a Sydney commercial space to AMP Capital Wholesale Office Fund (AWOF), owned by AMP (ASX: AMP) for around $317 million.
The 37-story downtown tower is currently in construction phase, and will move forward as a partnership between Mirvac and AMP. As part of its 50% ownership, AWOF will fund half of all development costs in exchange for a 4.6 year income guarantee on any vacant space (currently 26%). As AMP pays off its newly acquired assets, Mirvac has set its capitalization rate at 6.5%, with a 6.7% coupon payment to be capitalized over the property's development.
The 38,700 square metre space is a "landmark premium grade asset" in Sydney CBD, according to Mirvac CEO and Managing Director Susan Lloyd-Hurwitz:
"Following Mirvac's purchase from AMP Capital of the original George Street asset back in 2001, AMP Capital retained a right to acquire a 50% interest in the completed development. This transaction brings their interest forward and provides Mirvac with a fund through partner… [and] demonstrates our strategy to partner with high quality investment organisations whilst utilising the Mirvac integrated model to deliver property expertise."
"200 George Street is one of the most exciting commercial developments in the Sydney CBD and provides a strong addition to our portfolio of premium assets in the AMP Capital Wholesale Office Fund," said AMP Capital Head of Property Funds Management Chris Judd in a statement. "We look forward to building a mutually successful relationship with Mirvac on this project."
Construction began in January and is estimated to be completed in early 2016.
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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.
