THE WESTERN Australian Government has made a costly mistake by failing to exercise a lease option in Perth's tight office market.
As a result, the WA Government will see its rental costs jump three folds as it has no option but to sign a new lease agreement at the GDI No. 25 Property Income Fund owned 12 St Georges Terrace.
GDI told investors its careful, patient and strategic approach to the asset management of this lease has paid off.
The WA Government was leasing Levels 4 and 8 at 12 St Georges Terrace and did not exercise the option they had on their existing lease on April 30 2008.
As a result, GDI served the Government with notice to quit, to vacate the premises or enter into a new lease at market rents.
And
A Heads of Agreement has been signed with the Government for a new seven-year lease at $550 per sqm – the previous rent was $160 per sqm including car spaces.
As a result, the rent will increase from $519,000 pa to $1.4 million pa.
The new lease is expected to be signed later this month.
GDI said once the lease is signed, the property will be revalued.
Meanwhile GDI expects investment market conditions to improve later this year and will recommend investors approve selling the property as soon as practical.
“With a long-term lease in place, the prospects of selling this investment are enhanced,” GDI said.
Australian Property Journal