Abacus Property Group has splashed out $140 million dollars across two states, acquiring two city fringe office buildings in Sydney and Melbourne.
The listed property investor acquired Computershare's headquarters at Abbotsford in inner-city Melbourne for $93.5 million on a 5.85 per cent yield.
The building has a net lettable area of 16,577 square metres over three levels on a 16,920 square metre site with 140 metres frontage to the Yarra River and 485 on-site car spaces.
The Sydney acquisition was a $48.85 million sale for 11 Bowden Street in Alexandria, a modern commercial building with three levels of office space and rear ground car parking, built in 2016.
Related reading: Office Markets Outperform as Vacancies Hit Record Low
The Alexandria asset is fully-leased to five tenants with long leases and will have a weighted average lease expiry of over six years at settlement.
It was put to market with 5.7-year WALE, as Alexandria’s office market has been characterised by constrained supply and strong competition.
The Melbourne asset, located 452-484 Johnston Street, Abbotsford, was sold subject to a seven-year lease to Computershare at a net annual rental of $5.47 million.
CBRE national director Mark Wizel brokered the deal for Abacus and said confidence in Melbourne’s office leasing market, which has just recorded the tightest CBD vacancy level – 4.6 per cent – in nearly ten years, was now being correctly factored in to prices being paid for commercial office buildings.
“A tightly held sub-$100 million Melbourne CBD and St Kilda Road market, buoyed by strengthening tenant demand and the obvious potential for rental growth, is resulting in buyers having to look to the city fringe and suburbs in order to secure assets and that is going to drive further yield compression,” he said.
The building was originally owned by Chinese developer Hengmao Group’s subsidiary, LYZ Property Group, who held it for 18 months after paying a “lucky” $88,888,888 in a triple net leaseback to Computershare.