German group swoops on $85m Adelaide office block
German investment house Real I.S. has swooped on a Waymouth St office block in the Adelaide CBD for $85 million on behalf of a group of institutions that have mandated it to build up a $400 million portfolio.
The investors have directed Real I.S. to build up a diversified collection focused on core office properties in major Australian cities, with the possibility of adding retail, hotel and logistics assets.
The company launched the Real I.S. Australian Institutional Portfolio Funds, structured as a German special fund eligible for property quotas, and bought 100 Waymouth Street from private Singaporean investor Norelco Holdings in its first play.
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“We were able to make the first acquisition for our investors’ investment strategy. We focus on core, core-plus and manage- to-core properties. With this acquisition, we very quickly laid the foundation stone for the strategy of our fund following the mandate by our clients,” Real I.S. head of client relations and capital funding Tobias Kotz says.
The tower will generate an average distribution of 5.5% annually over the planned term.
“The office market in Adelaide currently offers a very attractive market environment to raise value for our investors through active asset management,” Real I.S. global head of investment management Axel Schulz says.
The 12,305sqm office complex sits on a 1450sqm site and is about three-quarters leased to top tenants, including Origin Energy and Beyond Bank providing a weighted lease term of 4.74 years.
The 1989-built block was refurbished in 2014 and 2018. It has also recently achieved a 5½ Star Nabers Rating. Knight Frank’s Guy Bennett handled the sale for sale that came just four years after the vendor picked up the tower from Cromwell for $73 million.
Bennett says South Australia’s strengthening economy is providing a platform for greater investment. “South Australia now has genuine economic drivers with investment confidence in the state continuing to rise, with investors increasingly attracted to the state’s diverse and sustainable economic base,” he says.
There has been a run of office buying in Adelaide. Other deals include Centuria Capital picking up 80 Flinders Street from a Lendlease-run fund. Real I.S. has been active in Australia for 14 years and runs ten properties in Canberra, Melbourne and Adelaide worth more than $1.14 billion.
This article originally appeared on www.theaustralian.com.au/property.
