This article is from the Australian Property Journal archive
FOR three decades Adelaide’s 77 Grenfell Street has stood in the heart of the city of churches as a reminder of the collapse of State Bank of SA in the early 1990s.
Yesterday owner German fund manager Real IS offloaded the tower to Wingate and IPG for $103.5 million – for slightly more than it cost to build, if you do not factor in inflation.
The German group put to property on the market last year and had been in due diligence since December 2017 to sell the 20-level tower which comprises 15,888 sqm of office space and 596 sqm of ground floor retail and onsite basement parking for 37 cars – of which is 96% leased to the South Australian government. The WALE is approximately 5.1 years.
Real IS bought the property in May 2011 from Shakespeare Management for around $92 million. The transaction was a major windfall for the Melbourne-based property group, which bought it in 2007 for approximately $50 million.
Shakespeare Management acquired the property from Brentwood Australis, which paid $41.7 million in 1993.
Built in 1991 at a cost of $100 million, it was originally the Australis Centre, work commenced in February 1989 but when developer Hooker Corporation collapsed later in 1989 its receivers appointed Concrete Constructions to complete the development.
Following the collapse of Hooker Corporation, the building was acquired by its financier, the State Bank of SA, which later sold it to Brentwood from the SA Asset Management Corporation, after the State Bank also folded.
CBRE’s Ian Thomas, Alistair Laycock and Thomas Gnieser, together with Colliers International’s Paul van Reesema and Alistair Mackie negotiated the sale.
Thomas said the competitive interest received during the sale campaign highlighted the strengthening investment appeal of Adelaide’s office market.
“It became evident during the sale process that the buyer profile for Adelaide assets has expanded since 2017, with an increase in interest from the eastern seaboard – particularly Melbourne. As yields continue to be driven lower in other capital cities, more groups are looking to Adelaide for a greater return with less volatility.
“With the removal of stamp duty for the sale of commercial property on July 1 this year, buyers have actively looked to move into the market to take advantage of the transaction cost savings. The abolishment of the stamp duty was positively received due to its impact on the initial yield – and also the potential for South Australia to be a trading market without the significant impost of stamp duty payable in the other capital city markets,” Thomas said.
van Reesema said Adelaide’s office market’s improving fundamentals were underpinning investor interest.
“Adelaide has hit an all-time high in 2018 in terms of both the number of major office sales and the aggregate value of transactions of investment, with 10 towers settling for more than $880 million and an additional three towers marketed for sale in the fourth quarter of the year,” van Reesema said, adding investor demand was widespread, with buyers from Singapore, Sydney and Melbourne all purchasing during the year.
Meanwhile this is the second major transaction in Adelaide this week after Con Makris sold 431 King William St for $43.1 million.
Australian Property Journal
