Début purchase secures premium location for Australian Government super fund members
ARIA, the $17 billion super fund for Australian Government employees, announced today that one of its real estate investment managers, Arcadia Funds Management Limited (Arcadia), has successfully finalised the purchase of a 92% interest in 1 Chifley Square in Sydney’s sought-after CBD core for $84.5 million.
The Vendor is a joint venture between entities associated with Valad Property Group and Amstal Property Group who purchased the property from DB RREEF in 2004.
ARIA’s chief investment officer, André Morony, said: “This is Arcadia’s first purchase for us, as part of a long-term mandate we signed with them earlier this year. We are very pleased with this new addition to our core property investments. It’s a great début purchase by the Arcadia team.”
Arcadia is a boutique real estate funds manager established in late 2002 by the former CEO of Lend Lease Real Estate Investments, Stephen Newton, and the head of wholesale funds management at Lend Lease, Hamish Flett.
1 Chifley Square is in close proximity to four of the existing premium commercial buildings in Sydney – Chifley Tower, Deutsche Bank Tower, Aurora Place and Governor Phillip and Governor Macquarie Towers.
Since 2003-04, approximately $20 million has been spent on substantial refurbishment of all leasable areas including major building services, plant and equipment.
The property has the benefit of a number of new long term leases to major accounting, legal, banking and technology companies. Major tenants who have recently committed to new leases include ANZ Bank, St George Bank, and Felsers Corporate. Valad Property Group has also leased back three floors as its corporate headquarters in conjunction with the sale of its interest in the property. A further one and a half floors are committed to major international tenants under heads of agreement which will bring the total occupancy of the building to 84%.
Upon completion of the leasing program, the property will have a weighted average lease term of approx 6.7 years and strong credit quality covenants consistent with ARIA’s core investment mandate.
ARIA has 15% strategic asset allocation to property and is one of the few large Australian investors returning to direct property investments through employee-owned boutique managers.
“We look for property investments which offer stable tenancy, steady income and long leases on behalf of the long term interests of our members,” says Morony.
“Quality real estate assets are in high demand and having a focus by dedicated managers on absolute return investing, as opposed to building FUM, is highly valuable. Boutique managers like Arcadia can provide this. They also have a small number of clients which translates to a clear focus, an alignment of interests and trust and a good governance framework.”
1 Chifley Square joins Indooroopilly Shopping Centre, Brisbane; 101 Collins Street, Melbourne; and 20% of Grosvenor Place, Sydney, which form the stable of direct property investments owned by ARIA.
ARIA’s intention is to continue to seek core and core plus commercial, retail and industrial investment opportunities in a number of key Australian real estate markets.
