This article is from the Australian Property Journal archive
ABACUS Property Group has snapped up two city fringe offices in Sydney and Melbourne for a total of $142.35 million.
Abacus acquired 452-484 Johnston St Abbotsford from LYZ Property Group, a subsidiary of Chinese developer Hengmao Group, for $93.5 million on a yield of 5.85%.
Despite the hot Melbourne market, LYZ has only made a small capital gain on the asset after buying the property 18 months ago for $88,888,888 on an initial yield of 6.56%.
The property comprises 16,577 sqm of office space over three levels and a 485-bay car park, set on a 16,920 sqm site. It was sold with a seven-year lease to Computershare at a net annual rental of $5.47 million.
The off-market deal was brokered by CBRE’s Mark Wizel, Lewis Tong and Kiran Pillai.
Wizel said the sale demonstrated the ongoing demand from buyers to secure income producing assets and the continuous hunt for yield.
“This is a very strong vote of confidence in Melbourne’s city fringe leasing market which reflects a strong desire and willingness for buyers like Abacus to pay sharper yields for assets that have significant underlying land value.
“A tightly held sub-$100 million Melbourne CBD and St Kilda Road market, buoyed by strengthening tenant demand and the obvious potential for rental growth, is resulting in buyers having to look to the city fringe and suburbs in order to secure assets and that is going to drive further yield compression,” he added.
Wizel said while consistent commentary in late 2017 suggested a cooling in certain parts of the Melbourne market, the year had started with a very high level of optimism and confidence from both investors and developers.
“There remains a very strong demand both domestically and off-shore for quality Australian property assets and with growing tenant demand for office space in particular, especially on the eastern seaboard, and the now much stronger global economic outlooks in USA and China and to a lesser degree in Europe, that is not about to change any time soon,” he continued.
Meanwhile in Sydney, Abacus acquired 11 Bowden St, Alexandria for $48.85 million.
Built in 2016, the property comprises 5,577 sqm of office space across the ground and three upper levels with parking for 55 vehicles.
It is fully leased out to five tenants with long leases with a weighted average lease expiry of over six years.
Australian Property Journal
