Eureka moves in on Adelaide ATO building purchase

Property fund manager and developer Charter Hall Group has secured a strong bid of over $250 million for the Australian Taxation Office Building in Adelaide with heavyweight Eureka Funds Management tapping its network of international investors as it seeks to tie up a purchase.

Local and foreign groups are hotly pursuing the city’s best office towers as a series of new projects also get underway, partly sparked by the state government’s stamp duty concessions.

The pending sale of the ATO tower comes as the city awaits a fresh wave of deals, with the SA government moving closer to locking down a buyer on the $210 million State Administration Centre precinct and Frank Wolf’s Abacus Property Group hunting for a purchaser on the $180 million Westpac House.

In the largest deal, private equity giant Blackstone last month bought Rundle Place shopping centre and the 80 Grenfell St office from Epc. Pacific for more than $400 million.

Charter Hall is pouring its attentions into the adjacent $300 million project, dubbed Precinct GPO, that is to be completed in 2018

The parties declined to comment on the latest deal which could show a crisp sub-6% yield and local CBRE representatives did not comment.

The mooted sale of the ATO building to wholesale specialist Eureka would also see Charter Hall turn its attention to a major redevelopment on an adjacent site. It last year lodged plans for two office towers and a refurbishment of the existing GPO and Telephone Exchange building.

Eureka, which manages both single account mandates and pooled investment vehicles totalling in more than $4.2 billion in real estate assets, has been capital raising for the purchase.

The firm tapped Asian money when buying the Australia Post headquarters in Cleveland St in Sydney’s Strawberry Hills and was also assisting Korean group Samsung when it made a play for a key Dexus asset in Sydney.

Blackstone recently purchased 80 Grenfell St in Adelaide from Epc. Pacific.

Eureka also assisted Germany’s Commerzbank on a deal to buy a Sydney tower for about $150 million in October and worked with another German investment house, Union Investment Real Estate, on other purchases in Sydney and Brisbane.

Charter Hall’s flagship wholesale office fund had snapped up a half stake in the ATO building from the embattled Aspen Group in 2014. As part of the deal it also picked up the associated development site.

The ATO building is a 37,313sqm A-grade complex completed in late 2012. It was majority let for an initial 15-year lease term to the ATO with the remaining 15% occupied by Australia Post on a 10-year term.

Now, Charter Hall is pouring its attentions into the adjacent $300 million project, dubbed Precinct GPO, that is to be completed in 2018. It has been promoted one of the city’s largest commercial investments and will rival a project by tycoon Lang Walker.

Jointly designed by architects Hassell and Fitzpatrick & Partners, Charter Hall hopes to set a new standard for office accommodation in the city. It will have two office towers — one on a vacant site next to the exchange and the other above the non-heritage components of the GPO.

Once completed, the project will comprise two A-grade office buildings and, with the refurbishment of the heritage GPO and Telephone Exchange, it will span a 38,983sqm of office space with a 3064sqm retail component.

This article originally appeared on www.theaustralian.com.au/property.