Sentinel Property Group is paying $20.9 million for its maiden South Australian investment – the five level office component of the 19 storey mixed-use The Conservatory on Hindmarsh Square, in Adelaide’s CBD.
With 4020 square metres of A-grade area and 10 car parks, fully leased to SA Health and the federal government’s Australian Trade and Investment Commission, the strata titled asset was offered by the Centuria managed Office REIT which valued it at $19m last June.
At the time, the property had a short Weighted Average Lease Expiry – 1.4 years.
Prior to it being listed in March, this was increased to 3.2.
The lease agreements also allow for 3-3.5 per cent annual rent rises.
The Sentinel deal reflects a 7.9pc net passing yield – or 8.1pc market return, given the property is considered under-rented to the tune of about $20,000 per annum.
Asset earmarked for high yielding trust
Developed in 2009 and recently refurbished, the Adelaide asset at 131-139 Grenfell Street will be held by Sentinel’s Northern Australia Investment Fund, which is promising unitholders a 7.25pc annual distribution.
Launched earlier this year, and fully subscribed, the trust controls four more properties – two Mackay warehouses, occupied by Scott’s Refrigerated Logistics and King Sports Group, a Darwin factory, majority rented to Inghams, and a Palmerston office, tenanted to the NT government and part used as a herbarium.
For other funds, Sentinel has in the last few months acquired Mackay’s Caneland Shopping Centre for c$280m from Lendlease, and Darwin’s Casuarina Square from The GPT Group for $420m (story continues below).
The Brisbane based company, led by Warren Ebert, also added three regional Queensland medical centres to its portfolio last year following a $22.63m spend.
Adelaide on the radar of fund managers, investors
The Conservatory office deal comes six weeks since Cromwell snapped up Chessell House at nearby 91-97 Grenfell St from Arc Equity Partners and Harmony for $81.35m – reflecting a bullish 5.12pc yield.
Three major commercial projects also started construction in the Adelaide CBD recently, including:
- Charter Hall’s 60 King William St, part of which will be occupied by Telstra as its local headquarters;
- the $400m Entrepreneur and Innovation Centre, the centrepiece of the Lot Fourteen project, replacing the ex Royal Adelaide Hospital, being delivered by Quintessential Equity, and which the Commonwealth Bank of Australia recently committed to occupying a portion of, and
- Cbus Property, in February kicking off 83 Pirie St.
Melbourne private investor Pelligra Group also invested in the city, again, with the $25.5m purchase of 80 King William St five months ago.
Following the sale of 131-139 Grenfell St, Centuria still holds Adelaide product including a Wyatt St site recently earmarked for a six storey office.
Last October, with MA Financial, that group also purchased the Grenfell Centre at 25 Grenfell St, for $166.6m.
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