Australian Unity sells trophy office after three years

The Centre of Defence contains two buildings developed in 2010.
The Osborne office, on 2.51 hectares, is selling to the occupier.

Following a tumultuous post-COVID backdrop, especially depressing demand for offices – made worse by a building boom in some markets – Australian Unity has sold an Adelaide asset for a loss on its December, 2020, outlay.

The trophy Centre of Defence building, on 2.51 hectares at 620 Mersey Road, Osborne, fetched $46 million, it is believed from the occupier, the Department of Defence, following an off-market campaign.

The manager outlaid $48.25m – a low 5.07pc yield – and against a c$45m guide for the investment in the Osborne Naval Shipyards precinct.

It was the 10th property for the Australian Unity Diversified Fund, boosting portfolio value by nearly 10pc to $575m.

Following other purchases and divestments, that value is now $514m.

Another office sold at a loss

Following the sale of the Osborne asset, the AUDF weighted average lease expiry increases from 9.1 to 9.4 years.

Occupancy is unchanged at 99.2pc, it added (story continues below).

Gearing meanwhile is 40.4pc with total borrowings at $208m.

CBRE’s Ian Thomas and Al Laycock with One Commercial’s Josh Charles and Simon Kent managed the Centre of Defence campaign; the asset contains 8006 sqm of A-grade area in two buildings and 330 car parks.

A vacant c3000 square metre tract can accommodate an extension or new building.

The deal follows Garda Property Group offloading modern Burnley, Melbourne, offices, for $80m, a drop on the $110.5m June, 30, valuation, and the $120m-plus asking price, when they were listed for sale mid-last year.

Charter Hall also recorded a circa nine per cent drop on an office in the Victorian capital – Orica House at 1 Nicholson Street, East Melbourne.

Dexus also divested a couple of Sydney CBD offices for discounts between 15-20pc.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of