Australian Unity-run fund promotes build-to-rent scheme

A small office trust, which boasts investors Geoff Wilson and Nick Bolton, could be on the way to being wound up and is looking to maximise the value of its assets.

Wilson Asset Management boss Geoff Wilson in Sydney. Picture: Nikki Short

 

The small office property trust that has attracted share market investor Geoff Wilson and stocks raider Nick Bolton – the Australian Unity Office Fund – has lodged plans for a soaring build-to-rent tower in Parramatta.

The company had flagged a move to consider alternative use opportunities for its properties at 2 and 10 Valentine Ave in the western Sydney hub, but the scheme for a dramatic 68-storey mixed-used development is larger than expected.

The proposal is well beyond the capacity of the Australian Unity fund to undertake on its own, as it has been selling down its office holdings in an effort to boost its laggard share price.

But the switch could make the site more attractive to potential buyers looking to get in on the area’s boom. About $850m of build-to-rent developments in western Sydney were approved by the NSW government just last month.

Parramatta is becoming a focus for the industry, with Urban Property Group and Novus advancing schemes and entrepreneur Tim Gurner also active.

No. 10 Valentine Ave is a vacant 14-level A-grade office property, near the Parramatta Bus and Railway Interchange and Westfield Parramatta, and neighbouring 2 Valentine Ave is a six-level car park.

The fund last month sold off a Brisbane office block for $64.5m at a premium to book value. The move shrunk it back to offices in Sydney, Melbourne and Canberra.

The sale was AOF’s fifth since June 2022, taking the portfolio value from $540m to $193m. It now has three assets: the Valentine Ave blocks ($95.5m); 468 St Kilda Rd, Melbourne ($70m); and 64 Northbourne Ave, Canberra ($27.5m).

Moelis Australia analyst Murray Connellan said in a note last month the fund’s near-term earnings were likely to remain muted, given the continued vacancy of 10 Valentine St and the lacklustre outlook for office markets.

“Given the potential (albeit far from guaranteed) to achieve further upside in the near-term through further divestments at close to book value, we believe that AOF’s current share price remains relatively attractive,” Mr Connellan said.