Australian Unity’s unlisted Diversified Property Fund has acquired South Australia’s ‘Centre of Defence” for $48.25 million.
CBRE’s Ian Thomas and Alistair Laycock negotiated the sale with Knight Frank’s Guy Bennett and Oliver Totani, acting on behalf of Prime Space Projects.
The sale price reflects an initial yield of 5.07%.
The prominent Adelaide property is situated in the Osborne Naval Shipyard – Australia’s premier naval precinct.
Branded the Centre of Defence, the 620-628 Mersey Road asset incorporates two campus-style office buildings providing a net lettable area of 8,006sqm. The offering also includes 3,000sqm of vacant land earmarked for the development of two additional office buildings totalling 6,000sqm.
The site is fully leased to the Australian Naval Infrastructure, a Commonwealth Government Business Entity, from July 2020 on a new 10-year lease with options.
Mr Thomas said the strong buyer convent and future development upside had underpinned strong interest in the Expressions of Interest campaign.
“The depth of bidders provided us with an insight into the current appetite for long WALE assets,” Mr Thomas said.
“The prospective purchasers represented a cross section of the investor market with levels of enquiry similar to pre-COVID levels.”
Mr Thomas noted that Prime Space Projects had a long association with the precinct, having developed the buildings over 10 years ago at a time when the defence sector was in its infancy.
“In recent years, South Australia’s defence sector has continued to grow exponentially with frigate and submarine contacts awarded and future investment forecast to exceed $90 billion,” Mr Thomas said.
“This was a key draw card for purchasers in light of the property’s development potential.”
Knight Frank’s Mr Bennett said the ability to secure a ten-year income stream, linked to a Commonwealth Government owned tenant had underpinned buyer interest.”
“This asset is situated in the most significant naval industry hub in Australia, which will be the home of naval construction and education for decades to come,” Mr Bennett said.
“It is the office hub of the precinct, which is expected to attract a work force of around 15,000 people through the Government’s Naval Ship Building Plan.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2019 revenue). The company has more than 100,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 530 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
