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Highlight Australian unlisted property investment deals of 2017

Invest / Direct Property Funds

Australia / Sydney

Feb 27 2018

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FV by GURNER, Fortitude Valley Brisbane

  • Asset type: Residential development
  • Investment type: Development financing - construction debt and preferred equity
  • Investor IRR: 18% - 25%


Developed by Rich-lister Tim Gurner's residential development company, GURNER, the 900-apartment development with an end value of approximately $600 million, comprises three residential towers and ground floor retail on a footprint of 5000sqm.

Designed by Elenberg Fraser, the first stage of 651 apartments consisting of two of the towers called “Flatiron” and “Valley House”, sold off the plan in record time in a matter of months during June 2014. Prices ranged from $360,000 for a one bedroom apartment and up to $660,000 for a two-bedroom apartment. Settlements commenced in September 2017.

The funding structure for Flatiron and Valley House was led by joint venture capital partner Thakral Capital Australia, and included a syndicated ANZ senior facility of $180 million, mezzanine funding provided by Apollo and Maxcap and a private family office via MP Funds Management as a blend of mezzanine and preferred equity, which were all repaid in full with principal and target return reached or exceeded.


132 Arthur Street, North Sydney

  • Asset type: Core–plus commercial offices
  • Investment type: Syndicated equity
  • Investor IRR: 42.8% and a cash multiple of 2.24 x


Centennial Property Group acquired the 16-level commercial office building comprising 14 levels of office accommodation, a café and 52 car bays over three above-ground levels, with extensive harbour views. The property benefits from two street frontages and entry points on Arthur Street and Little Walker Street. The asset purchase price was $36.75 million or $4,656 per sqm based on NLA and reflected a passing yield of 8.26%. 

During the investment period, Centennial Property Group completed 17 leasing transactions comprising eight lease renewals and nine new lease deals, which improved the WALE from 2 to 3.42. The asset was sold to Aqualand after 28 months, in April 2017 for $70 million or $8,858 per sqm reflective of a passing yield of 5.5% or fully leased capitalisation rate of 5.7%.


10 Spring Street, Sydney

  • Asset type: Core commercial offices
  • Investment type: Syndicated equity
  • Investor IRR: 36% and a cash multiple of 3.1x


10 Spring Street, Sydney – also known as Swire House – is a 17 level B-grade commercial office tower completed circa 1980. Centuria Capital Group acquired the property at a cyclical low for $91.64 million in 2013, with a view that Sydney CBD would benefit from an improvement in investor appetite over the medium term. The purchase price was reflective of an 8% capitalisation rate.

Comprising two retail levels in an arcade configuration over the ground and upper ground floors, 14 upper levels of office accommodation and basement car parking for 41 cars, the property is located on the eastern side of Spring Street approximately 50 metres from Pitt Street and within the Core Precinct of Sydney CBD. 

Centuria executed several key strategies to maximise value, including an investment to split and refurbish vacant floors and comprehensively refurbish foyers, amenities and the retail arcade.

The result was a dramatic improvement from 19% vacancy to 100% occupancy in just 18 months from purchase, a 32% increase in average passing office rental levels (record of $1200 per square metre) from high tenant demand, and a significant reinvigoration of the previously struggling retail arcade.

Following changes to the City of Sydney Draft Planning Strategy in 2016, the asset is now a Strategic Site providing the potential to construct a tower of up to 290 metres in height.

Centuria sold the asset in October 2017 to Lendlease for $270.05 million, reflecting a yield of 3.91% or $19,477 per sqm based on an NLA of 13,886, and a fully leased WALE of 3.32. The transaction broke previous sales records for CBD B-grade office buildings.  

This transaction was listed as the AFR “Deal of the Year”.






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