This article is from the Australian Property Journal archive
360 Capital REIT has taken an 11.5% valuation hit on its three directly owned assets as structural headwinds and higher interest rates continue to impact the commercial real estate sector.
The assets were acquired from Irongate for $256.7 million in March of 2022, and now worth a combined $201.4 million.
Its half-share in the 510 Church Street building in Melbourne’s Cremorne saw $12.5 million, or 10.6%, wiped off its value to $105.0 million, on the back of a capitalisation rate increase of 0.75%.
The 19,752 sqm building is a split of 65% office and 35% healthcare, and more than 95% leased to the businesses including NDIS, Monash IVF, Dentsu Aegis, TLA Global and Kane, on long-term leases
On a percentage basis, the biggest hit was taken by the high-tech industrial building in Cannon Hill, eastern Brisbane, occupied by ASX-listed jewellers Michael Hill. The 16.7% fall in value at 34 Southgate Avenue showed a $6.0 million drop to $30.0 million, with its capitalisation rate increasing by 1.25% to 6.50%.
Its four-storey A-grade commercial office building in Forrest, Canberra lost $7.6 million in value, equal to 10.3%, to $66.4 million, with a capitalisation increase of 0.75% to 6.25%.
360 Capital noted that “in anticipation of the continuing deterioration of the commercial real estate market”, the fund undertook an entitlement offer in February raising $25.5 million to reduce debt. Post revaluations, the Fund remains “comfortably” within its banking covenants, it said, with pro forma gearing of approximately 35%.
