AMP Capital has entered an agreement with Mirvac Group to acquire 50 per cent of a development on Sydney city's main strip.
AMP Capital was the original owner of 200 George Street, Sydney and had previously negotiated rights to acquire a 50 per cent interest in any future development of the site.
The AMP Capital Wholesale Office Fund (AWOF) will acquire the land and development for $317 million, while Mirvac will provide AMP Capital with a rent guarantee over any remaining unleased space at completion for a term of four years. Ernst & Young has stepped in to accept a substantial pre-letting agreement for a term of 10 years from completion.
"The acquisition is consistent with our strategy to remain focused on core, well-located office towers and bring some newer assets into the fund to increase the quality of the portfolio, and deliver our investors strong risk-adjusted returns over the long term," said AMP Capital head of property funds management, Chris Judd.
"We are pleased to further build upon our relationship with Mirvac Group where we benefit from partnering with a well-regarded residential and commercial developer."
AWOF has remained lowly geared and able to fund the development while remaining within the target gearing range, it said.
The fund had $2.8 billion in assets under management as of the end of 2012.
