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GDI Property Group (ASX: GDI) is optimistic about the improving Perth office market and has exchanged a conditional contract at 180 Hay Street in the city's CBD for $12.59 million.
Built in 1999, the property has 4,925sqm of well-presented office space over four floors and a mezzanine level.
The company expects that on settlement around 30 June 2020, 180 Hay Street will be 100 per cent vacant.
"180 Hay Street is a typical GDI acquisition," says GDI managing director Steve Gillard.
"It has a central core, an abundance of natural light, is being acquired for significantly below replacement cost and has an opportunity to add value through a refurbishment and releasing campaign.
"With an existing portfolio of assets in the Perth CBD that includes Mill Green, Westralia Square and 1 Adelaide Terrace, we are extremely confident in the short to medium term outlook of the Perth CBD leasing market and are excited to be adding 180 Hay Street to our portfolio."
GDI has around 12 months to decide whether the property will be owned by its listed GDI Property Trust or formed as the seed asset for a new unlisted, unregistered management investment scheme.
The move follows a recent revaluation of another GDI property in Perth, 141 St Georges Terrace from $255 million to $285 million over the course of 12 months.
The group attributed the valuation increase to improvements in both the Perth rental and capital markets, as well as capital expenditure and renovation plans for the building itself.
In late 2018, GDI's Mill Green, Perth property saw an $8.9 million uptick in its valuation to $330.0 million, while its 50 Cavill Avenue, Surfers Paradise property rose $11.9 million in value to $100 million.
While GDI is based in Sydney, the majority of its properties are in Western Australia while it also has assets in Southeast Queensland, Townsville, Newcastle and Tasmania.
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