This article is from the Australian Property Journal archive
ACTIVITY in Adelaide’s CBD office market is ramping up, with Cromwell Property Group buying the 95 Grenfell Street tower for $81.35 million for an unlisted fund as investors continue to back CBDs.
Known as Chesser House, the 11-storey A-grade building is anchored by the South Australian Attorney’s General Department, NDIS, Ombudsman SA, Serco and CyberCX.
It has 11,121 sqm of floor space and a 6.1 year weighted average lease expiry, with the sale price representing a passing yield of 5.12% and core capitalisation rate of 5.5%.
It will be held in the Cromwell Direct Property Fund (DPF), which over the past 12 months the fund has picked up Brisbane CBD towers 545 Queen Street for $117.5 million and 100 Creek Street for $184.7 million.
New end-of-trip facilities, a ground floor lobby upgrade, refurbished lift lobbies and modernised lift cars have been introduced at Chesser House, as well as new 93 kilowatt solar panel system has also been installed, and which generates 17% of the total base building power. The building has a 5-Star NABERS Energy rating.
In a deal negotiated by Knight Frank’s Guy Bennett and Colliers’ Paul Van Reesema and Alistair Mackie, the property was snapped up prior to the commencement of a formal marketing campaign. On the sell side are Harmony Property Investments and Arc Equity Partners.
“This repositioned A-grade tower is perfectly placed to capitalise on Adelaide and South Australia’s growing economy and the CBD office market, and presents a unique opportunity to activate Chesser Street,” Bennett said.
“To date, $20 million has been expended on both base building related works and various tenancy fit-outs at Chesser House, in addition to a further $10 million flowing from the recent leasing incentives.”
Chesser House provides direct links to major transport routes and connectivity to Pirie Street and Adelaide’s major retail precinct, Rundle Mall.
“The Adelaide CBD is set to benefit from significant economic activity as a result of state and federal government spending on defence, technology, innovation and biomed,” said Cromwell’s head of retail funds management, Peta Tilse.
That includes the Department of Defence’s $35 billion Future Frigate project and the $3.6 billion medical precinct, which will become the largest health cluster in the southern hemisphere.
Cromwell said it is committed to growing its global funds and asset management business. This company is now managing $7.8 billion of total third-party funds under management.
DPF pays a 5.4% annualised distribution yield, has attracted more than $50 million of gross inflows over the past six months, and delivered a total 12-month return of 14.7%. The fund has nine assets across Queensland, New South Wales, Victoria and the Australian Capital Territory.
Elsewhere in Adelaide, German group Atlantic Funds is hoping to net $180 million for the Riverside Centre, after undertaking a refurbishment and leasing program of the distinctive state and federal government-tenanted A-grade tower, while BlackRock has lobbed the 151 Pirie Street office building overlooking Hindmarsh Square to the market.
Recent sales have included Centuria Capital Group and MA Financial Group teaming up to buy the The Black Stump for $167 million with designs on repositioning the A-grade asset.
Investors have also been backing a rebound of the cities in Brisbane, Melbourne and Sydney of late.
