Elanor Investors Group (ENN) is spending $185 million on a modern Pyrmont office for a single asset fund.
The deal for 19 Harris Street is being struck at a 4.25 per cent passing yield; the asset is 3.8pc vacant.
It also reflects an impressive capital gain for the vendor, Boston based AEW Capital managed Value Investors Fund, which paid UBS Asset Management $143m – again on a tight return, of 4.87pc – in late 2018.
ENN is now raising $87.1m, with plans to hold the property in the Harris Property Trust, which it will manage.
The deal comes seven months since the investment house outlaid $113.5m for Surfers Paradise’s prominent 50 Cavill Avenue.
That office is now held by the Elanor Commercial Property Fund.
Also last year ENN spent $80.2m on two adjoining commercial buildings at Brisbane’s Woolloongabba – leased respectively to Brisbane Catholic Education and Queensland Health.
These assets seeded another trust – the Burke Street Fund.
19 Harris Street
The seven level Harris St building contains 12,649 square metres of area with a 2.5 year Weighted Average Lease Expiry (story continues below).
Thomson Reuters is the biggest occupier – contributing to just over half the income.
The National Associated Retail Traders Association and Mapfre Insurances are the next biggest tenants, each leasing eight pc.
A ground floor tenancy contains 147 sqm.
The site spreads 2298 sqm with 136 basement car parks.
According to ENN, the property is under-rented to the tune of about 24pc below the market rate – giving the manager scope to negotiate with existing occupiers, or find new ones, to balance that out in the medium term and deliver a bigger return for investors.
Harris Property Trust aims to run between five and seven years, targeting a 13.5-15pc Internal Rate of Return.
Forecast distribution for FY22 is 5.2pc rising to seven pc, per annum, by the end of 2027.
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