Growthpoint fund buys Canberra asset for $90m
2 Constitution Ave, Canberra
Listed Growthpoint Properties Australia has launched an unlisted property fund to back its purchase of a building in Canberra for just over $90m as syndicators pick up the pace of their buying.
The past few weeks have produced a burst of activity from the likes of Sentinel and Forza Capital, which have shown a willingness to bet on the office cycle swinging upwards.
Growthpoint’s play is one of several as fund managers seek to cash in on the potential for market dynamics to improve, particularly in markets like Canberra, which is perceived as safe but with constrained supply.
The new Growthpoint Canberra Office Trust has struck a deal to buy the complex in Canberra’s CBD from ISPT for $90.05m.
CBRE’s Nic Purdue handled the sale but declined to comment.
The block at 2 Constitution Ave is in a prime position. It comprises 19,465sq m across two towers and is about 96 per cent occupied by area, with 88 per cent of passing income secured by government and government affiliated tenants.
The Growthpoint syndicate is forecasting average 9 per cent annualised distributions and a forecast internal rate of return range of 15-16 per cent.
Growthpoint Funds Management executive director Sam Sproats said the company had secured the counter-cyclical office investment opportunity, with a clear strategy to drive income and enhance asset value via building electrification and a net zero strategy.
“We believe acquiring at $4620 per square metre represents deep value buying, with replacement cost approximately 80 per cent above the purchase price,” he said.
Growthpoint chief executive Ross Lees said Canberra’s CBD vacancy was at 9.5 per cent, one of the lowest in the Australian office market, and anticipated growth in government staffing levels of approximately 9 per cent in 2024-25 is expected to support demand for this asset.
“The Growthpoint Canberra Office Trust represents progress in our strategy of growing our funds’ management business, leveraging our management expertise to create attractive investment opportunities for our syndicate investors” Mr Lees said.
The purchase comes just days after Warren Ebert’s Sentinel Property bought its second Canberra site, for more than $72m, in a sign of confidence in that market. Sentinel is bullish about Canberra’s prospects and it launched a trust to buy the asset at 18 Canberra Ave, Forrest, from Charter Hall.
The transaction also shows Growthpoint’s new emphasis on funds management. Last month, US investment giant TPG Angelo Gordon pushed into the local property market by striking a deal with Growthpoint under which it will take a majority stake in about $200m worth of industrial parks.
