The Australian Unity Diversified Property Fund (DPF) has been granted an option to acquire one of Melbourne’s most environmentally sustainable office buildings from Impact Funds Management Pty Ltd for $42.3 million.
The DPF offers a diversified property portfolio with a balanced sector and geographic allocation providing a stable income return from earnings achieved through high occupancy and a strong weighted average lease expiry.
If the option is exercised, settlement of the property will occur in late October 2014. The property purchase will be accretive to DPF’s income return and will be funded by capacity within the existing debt facility of the fund, which has a current gearing level of 38 percent.
The property at 200 Victoria Street, Carlton, Victoria is a high quality, seven level, A-grade office building with associated retail and car parking leased primarily to the Environmental Protection Authority and Trinity College, the University of Melbourne. It comprises 7,490 sqm office accommodation over six levels, 422 sqm of retail space over three tenancies on the ground floor, and eight secure on-site car parking bays. The lease expiry is 7.7 years weighted by income and area.
Mark Lumby, head of property funds – retail, at Australian Unity Real Estate Investment, says: “The acquisition will enhance DPF’s geographic, sector and tenant diversification as well as the earnings and distribution return for investors by providing stable, secure long term cash flow – enhanced by fixed annual rental increases – through high quality calibre tenants.”
“The property was substantially refurbished in 2009 to become one of Melbourne’s most environmentally sustainable office buildings with a 5 star National Australia Building Energy Rating and a 6 star Green Star rating for office design.”
The property will improve the fund’s sector allocation moving closer to the fund’s strategy of a neutral allocation for office, retail and industrial – the weighted average lease expiry will also be improved to be greater than 5 years.
“Following settlement, more than 50% of the fund’s income will be derived from national tenants” Mr Lumby says.
The deal was negotiated off-market by Leigh Melbourne of Colliers International.
Australian Unity Investments is the funds management arm of Australian Unity – a national healthcare, financial services and retirement living organisation. A mutual organisation operating for over 170 years, Australian Unity provides services to some 600,000 Australians, including 320,000 members.
Australian Unity Investments was named the Professional Planner / Zenith Investment Partners Direct Property Fund Manager of the Year for 2013 and Australian Unity Real Estate Investment (AUREI) was named the winner of the 2013 Australian Property Institute NSW Excellence in Property Awards in the Property Trust Industry category.
AUREI manages a range of diversified property funds, covering healthcare, retail, industrial, commercial and office property and has over $1.6 billion in property assets under management (as at 31 May 2014).
Informed by Australian Unity’s broad and influential community of investment and wellbeing experts, our Real Estate Investment team aims to go further in its insights into Australia’s commercial property markets and deliver deeper perspective to investors.
Impact Funds Management Pty Ltd is wholly owned by the Impact Investment Group (IIG). IIG is a leading impact investment fund manager and co-investor. Established in early 2013, IIG advises and co-invests besides like-minded investors in properties offering commercial returns alongside positive social and environmental impacts. IIG has successfully arranged and co-invested in six investment syndicates, with approximately $100 million in assets under management. It is owned by Chris Lock (Chief Executive Officer) and Small Giants, the family office of Daniel Almagor and Berry Liberman. IIG is an active and ethical manager that benchmarks its fees to the long term performance of its assets.
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Phone: 03 8682 4548