German superannuation fund Real I.S. has purchased 11-33 Exhibition Street, Melbourne for a value of $136 million, its first Australian asset. The marketing agents for the successful transaction were Alistair Meadows and Andrew Stern of DTZ Australia.
The Commonwealth Property Fund sold the recently completed 17 storey office building in an off market transaction. The property will be placed in a closed-end property investment fund and syndicated to German retail investors.
In the statement released in Germany, Real I.S. said the strength of the economy made Australia an attractive place to invest, and given the excellent market conditions, Real is expected to purchase further assets in the future.
Real I.S. is only the second German institutional investor to acquire property in Australia, following Deka Immobilien Investment, who have acquired an $850 million portfolio of office towers, mostly in Sydney, over the past 6 years. According to DTZ Director Alistair Meadows, DTZ is working closely with several other major German funds that are also considering substantial investment into the Australian property sector. "Australia is recognised as a very mature and economically stable environment for overseas investors who are looking for strong tenancy covenants and solid capital growth."
The property was completed in June 2005, and has a net lettable area of approximately 23,000 m², seven levels of car parking for 346 vehicles and two levels of street front retail. The tower comprises 17 levels of A grade office accommodation with floor plates averaging 1,685 m². The sale resulted in an initial yield of approximately 6.6%. The two anchor tenants located in 11 Exhibition Street are William M Mercer, who has signed a 10 year lease over 10,000 m², and the Australian Industrial Relations Commission with a 12 year lease.