Fund manager EG has snapped up a multi-tenanted commercial property in inner-city Melbourne as institutional investors look to firm their footing in the city’s re-emerging commercial sector.
The Sydney-based fund manager paid $27.3 million for the 3500sq m site at 675 Victoria Street in Abbotsford.
The B-grade property was acquired for EG’s Yield Plus Infrastructure No. 2 Fund—a closed fund launched in 2016 which targets investments in the office, retail and industrial sector.
The off-market acquisition was brokered by Andrew Dawkins from Dawkins Occhiuto at an initial net yield of approximately 6 per cent.
The three-level office building has a total net lettable area of 3747sq m and was extensively refurbished in 2009.
Tenants include Icon, one of Australia’s largest construction companies, adding to the building’s weighted average lease expiry (WALE) of 1.54 years.
Since launching in 2000, EG has amassed $4.3 billion in assets under management on behalf of super funds and private wealth clients. It also currently holds a $3.9 billion in development pipeline.
In the past 12 months EG has acquired nine new assets.
EG head of capital transactions Sean Fleming said the property had been identified early and was well-suited to EG’s Yield Plus Infrastructure No. 2 strategy, which “seeks to acquire assets within close proximity to new and existing infrastructure”.
“The weight of capital that is now chasing income-producing property in the Australian market indicates the need for a disciplined, data-driven approach in assessing the risk profile in commercial real-estate opportunities,” Fleming said.
In September last year EG secured a new investment mandate from Singaporean sovereign wealth fund GIC to invest up to $400 million in income-producing real estate near new or upgraded transport infrastructure.
Another ESR Fund, the $1-billion ESR Australia Development Partnership, targets new logistics developments.
It is also backed by GIC, which has committed $400 million of equity as the cornerstone investor.