This article is from the Australian Property Journal archive
ADELAIDE's office market will finish the year on a high following the sale of an office building at 151 Pirie St by German-backed Real I.S. Australia for $72 million.
The property has been acquired by private Adelaide investor Viv Padman in a deal reflecting an initial yield of circa 7%.
Real I.S, is a subsidiary of Munich-based Real I.S. Group, and bought the property in 2006 for $61 million on behalf of institutional investors.
Real I.S. Australia managing director Vishant Narayan said the group continues to grow its Australian operations, with 10 major property transactions executed since 2005 and $1.25 billion in office property assets under management.
“We were one of the first German funds management groups to begin investing into Australia, and we have steadily built a track record and reputation as a strong counter-party in this market.
“We have been long-term property holders in Adelaide and will continue to reinvest in quality assets with solid income fundamentals, in line with our fund strategies,” Narayan said.
“We can look back with some pride at what we have achieved for our investors: we bought at an opportune time in the cycle and divested after major leasing transactions extended the building’s weighted average lease expiry to a healthy 5.7 years.
“A strategic element in our leasing strategy was to introduce rooftop solar panels to provide a renewal energy source for the building and increase its NABERS Energy rating to 5.5 stars,” Narayan added.
The eight-storey comprises 12,650 sqm of space and the major tenants include KPMG, which recently extended its lease term for a further 12 years, along with Macquarie, CBRE and BankWest.
Following the sale, Real I.S. now manages seven office assets across New South Wales, South Australia, ACT and Victoria covering 213,000 sqm with a high weighted average lease expiry of 9.3 years.
Its portfolio includes the Commonwealth Bank’s purpose-built office complex at 10 Dawn Fraser Avenue, Sydney Olympic Park; Defence Plaza at 655-661 Bourke St, Melbourne; and the new Australian Tax Office complex at 21 Genge St Canberra.
“We are interested in buildings that have major tenants on long lease terms. We also favour buildings that display strong sustainability features which have the dual benefit of being attractive to both government and blue chip tenants. As a result, government bodies represent 79% of our tenant base, while 96% of our tenants are considered ‘blue chip’.
“We will also consider high quality, multi-leased commercial buildings in strategic locations. With our in-depth Australian office knowledge and strong local platform, we can continue our hands on active asset management approach, creating real value for our investors.
“We continue to see strong investment interest in Germany and will meet demand through the careful selection and acquisition of Australian office assets, or by selectively investing in other sectors which offer the right investment parameters,” Narayan concluded.
CBRE’s Alistair Laycock, Phil Rundle, Josh Cullen and Rick Butler negotiated the sale.
Laycock said the campaign generated significant national and offshore buyer interest.
“Opportunities to purchase new generation office assets in Adelaide, constructed post 2006, have been very limited and as a result there was a high level of interest from both private and institutional investors,” he added.
Rundle said the property offered efficient and flexible floors of circa 1,500 sqm, with commanding views to the north overlooking Hindmarsh Square and to the east towards the Adelaide foothills. It also benefits from its location in the vibrant “Eastern Precinct” of the Adelaide CBD, offering convenient access supported by basement parking for 61 cars.
The latest transaction has put Adelaide in good form for the year ahead.
Last month, Lend Lease bought the Flinders Link portfolio consisting 60 Flinders St, 80 Flinders St and the eight-level 694-bay car park at the rear, as well as 60 Light Square from German’s Sachen Fonds for $175.2 million, which was the largest single portfolio sale in the city’s history. Knight Frank’s Guy Bennett and Peter McVann negotiated the deal.
Currently Colliers’ Ian Thomas and Paul van Reesema in conjunction with Savills’ Peter Peter Isaksson and Rino Carpinelli are marketing the home of the Commonwealth Bank at 100 King William St, which is expected to fetch around the low $90 million mark.
Knight Frank’s Guy Bennett and Peter McVann are handling the sale of two adjoining office buildings at 44 and 50 Pirie St and another asset at 51 Pirie St.
Australian Property Journal
