The article originally appeared in Australian Financial Review.
Canberra’s office sales market is surging toward a record year with Real Asset Management becoming the latest player to buy in, paying Lendlease $115 million for 25 Constitution Avenue.
It’s understood the acquisition of the Alan Woods Building was made by RAM’s new Diversified Property Fund, primarily backed by offshore investors, and has received Foreign Investment Review Board approval.
Lendlease’s flagship office investment vehicle, Australian Prime Property Fund Commercial, put it on the market soon after a renovation that led to it securing the Commonwealth of Australia as a major tenant.
Built in 1988, the building has 16,600sq m of net lettable space, is 100 per cent leased and was sold on a passing yield of about 5.5 per cent. Selling agent Tim Mutton from JLL declined to comment.
Meanwhile, sources say ASX-listed Cromwell Property Group is in exclusive due diligence on the adjacent building at 33 Allara Street, which is of a similar vintage and expected to fetch almost $80 million.
The eight-storey building near the Canberra Convention Centre, Canberra Casino and Glebe Park is being sold by leading local developer Molonglo Group after extensive refurbishment. Molonglo bought it in 2015.
It has been quietly marketed by Colliers, which did not return calls.
Buyer demand has been exceptionally strong for government-backed long weighted lease expiry Canberra office assets.
Including 25 Constitution Avenue and 33 Allara Street, nine Canberra office assets have sold far this year for just over $860 million.