25 Sep 2014

APPF lands $175m Adelaide portfolio

Lend Lease ’s Australian Prime Property Fund Commercial has beefed up its office exposure, buying an Adelaide office portfolio for about $175 million – the largest office transaction in one-line in South Australia’s history.

The deal was first foreshadowed by The Australian Financial Review in August. German real estate fund SachsenFonds offloaded the four assets, which received more than 120 inquiries during its five-week campaign, suggesting Adelaide is becoming a more ­attractive market for investors in commercial property.

The three commercial buildings in the central business district are 100 per cent leased to ASX top 100 companies. Market sources said the transaction reflected blended yield of about 8 per cent to 8.5 per cent.

It has been a busy period for Lend Lease’s funds management unit. The sale of its $300 million Core Plus portfolio to LaSalle Investment Management is imminent.

Managing director of Lend Lease’s Australian investment management business,  Kylie Rampa,  said the acquisition helped improve the fund’s scale and ­diversification. “The Adelaide office market is forecast to deliver ­outperformance driven by a low office supply outlook and strong health, education and resource ­sectors,” Ms Rampa said.

“The assets are well-located, high-quality modern buildings offering attractive investment ­metrics and are strongly aligned with the Fund’s focus and commitment to sustainability.”

The campaign was steered by Knight Frank. Director  Guy ­Bennett  said there had been a surge in institutional interest in Adelaide as investors were priced out of cities such as Melbourne and Sydney.

“In the past 12 months major institutions including CorVal (on behalf of Future Fund, Funds SA and Vic Super), Charter Hall, CBus and Lend Lease have acquired ­significant assets in the Adelaide CBD,” Mr Bennett said.

The assets now held by APPF Commercial include the ­Santos Centre at 60 Flinders Street, the IAG Building at 80 Flinders Street, 60 Light Square and the Flinders Link car park.

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