ING Office Fund is taking investors to the Netherlands with the purchase of a 20% interest in the ING Dutch Office Fund for €267.7 million ($A446.2 million).
The interest is being acquired from ING Insurance in the Netherlands, on a net initial portfolio yield of 6.4% (before leverage and fees).
DOF is the largest wholesale office fund in the Netherlands valued €1.66 billion ($A2.77 billion), with a portfolio of 78 properties consisting of 734,285 sqm of office space and 13,338 parking spaces.
The majority of DOF’s assets are located in the four major office markets of the Netherlands, Amsterdam, Utrecht, the Hague and Rotterdam.
The portfolio has an 88.5% occupancy rate and an average lease term of 4.2 years.
IOF’s chief executive Tino Tanfara said the investment gives IOF an immediate weighting to the key Dutch office markets at what we believe is an ideal entry point in the office market cycle.
“Not only are the office market fundamentals in the Netherlands improving, but office yields in the Netherlands are generally higher than in other major office markets in Europe, providing a material yield premium to the European 10 year bond of approximately 260 bps, with strong total return prospects expected from the portfolio,” he added.
Following completion of the transaction, the fund’s annualised earnings are forecast to increase by approximately 3.5% and distributions by approximately 3%, to an equivalent annualised distribution rate of 10.70 cents per unit from 1 January 2007.
The acquisition is subject to approval by unitholders at the Annual Unitholder Meeting to be held on December 07, 2006. Funding for the acquisition will include an institutional placement of 125 million units conducted via a bookbuild, with a price range of $1.52 to $1.56 per unit. The placement will not proceed if the acquisition is not approved by unitholders.
The acquisition is due to settle on December 13, 2006.
By Kathryn O’Meara
