EG spends $450m on Sydney offices

Sixty Carrington Street, in Sydney.

EG Funds has paid $450 million for three Sydney offices.

The deal, for 32 Walker Street, North Sydney (pictured, top, and selling for a speculated c$95m), and a half stake in 50 Carrington St and 60 Carrington St, in the CBD, is being struck with AMP Capital, which manages them on behalf of Swiss Re.

The buyer is also paying Brookfield $107m for the balance of 50 Carrington St.

The entrance of 60 Carrington Street.

All up with 32,454 square metres of lettable area, the properties are 93 per cent occupied.

The blended Weighted Average Lease Expiry is 2.9 years.

They will be held by the unlisted, open-ended and acquisitive EG Australian Core Enhanced Fund (ACE), which presently has another $500m to spend.

EG ACE maintains diversity

ACE now controls eight properties – a mix of offices, industrial and retail – worth at a total of c$700m.

The manager’s strategy is to reposition assets to core and deliver strong risk adjusted returns.

In April, Dutch pension fund PGGM made a $500m commitment.

 “The [latest] portfolio fits well with the investment strategy to acquire well located properties where value can be added over time,” EG ACE fund manager Michael Noblet said.

“We have high conviction in the precincts and the Sydney CBD office market over the long term” he added (story continues below).

The Carrington St properties are near the Wynyard station – an area seeing major renewal and investment care of the Metro light rail.

Seven months ago, again for ACE, EG acquired a Bunnings investment at Rockdale – leased to the hardware chain for three years, it offers significant development upside if it were to become vacant.

Also last year the trust paid Bob Ell’s Leda Holdings $38.2m for an Ingleburn business park with three assets.

The fund’s first property was also in Sydney – a distribution centre at Kurnell purchased with a leaseback to Dicker Data.

Four months ago, the manager outlaid $32m for a 24-unit industrial estate at Mansfield, south east of Brisbane.

EG now worth $4.3b with a $1.9b development pipeline

Including the Walker and Carrington St offices, EG manages real estate worth $4.3 billion on behalf of a mix of investors – super funds and private wealth clients amongst them.

In March it seeded a new fund in partnership with Singapore listed GIC – EG Urban Renewal Joint Venture – purchasing three under-utilised Macquarie Park assets, on 1.4 hectares, from Growthpoint for $66.1m – a 7.2 pc yield.

One of the manager’s oldest funds – EG Yield Plus Infrastructure No 1 – established in 2006, holds 17 assets valued at a total of $311m.

EG’s development pipeline is worth $3.9b.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.