This article originally appeared in CityWire.
The $3.6bn fund manager with 15+ strategies has added a high-quality office tower to its unlisted property fund, increasing the fund’s value by almost 50%.
Real Asset Management (RAM), the Australian-owned asset manager specialising in real estate, credit and private equity markets, has acquired a modern 23-storey A-grade office tower in Brisbane CBD for $141.1 million, increasing the value of its RAM Diversified Property Fund from $297.9m to $439m.
The fund aims to provide investors with a stable quarterly income stream with the potential for capital growth. The fund aims to deliver a total return (after fees) of 8-10% p.a. The one-year to 30 September return is 3.75% compared with -21.48% for its benchmark S&P/ASX 200 A-Reit TR.
The asset will become the fifth in the unlisted property fund, which has a weighted average lease expiry (WALE) of 4.9 years and an occupancy rate of 100%. The other four properties are three office buildings across Brisbane, Sydney and Canberra, and a medical precinct in Perth.
RAM head of real estate, Matthew Strotton, said: ‘This attractive deal is accretive to fund WACR [weighted average capitalisation rate]. It increases exposure to the high growth Brisbane market, is in a desirable CBD location and provides access to strong contracted rent growth as well as potential value-add opportunities.
‘We are at a point in the cycle where taking a position in pre-existing, well-let assets with long-term contracted income is very attractive.’
The new-generation office tower was sourced off-market on what RAM describes as attractive terms including a passing yield of 7.03%. The building has a 4.15-year WALE, comprises a 16,301 sqm net lettable area and is 100% leased to top tenants, including the Federal government and one of Australia’s leading superannuation groups – Brighter Super – which was created in 2021 by the merger of Energy Super and LGIA Super.
RAM was attracted to the Queensland asset as the state ‘has a strong economic outlook and leads the charge in Australia’s economic recovery with nation-leading jobs growth and interstate migration fuelling historically high levels of population growth’.
RAM anticipates settlement to occur by the end of 2022 subject to FIRB approval.