The Sydney real asset manager is raising $23 million for the equity component of the property, which it will half-own with a South Australian investment outfit.
Realside Property has snagged an Adelaide CBD office building at an appealing 27 per cent discount to the price it last traded for – seven years ago.
The discount was made possible by the building’s capital expenditure requirements and its current vacancy levels. The office tower is 75 per cent empty after the departure of its largest tenant last year.The steep discount in Adelaide has mirrored experiences in other major cities including Melbourne, where REST pulled a 17-storey building in Docklands from the market in March after the best offers came in at around $390 million.
Realside is telling potential investors that it is confident it can whip the office tower back into shape and hit “high-teen” returns on an internal rate of return basis and a short three-year exit timeline. from Brookfield in a deal understood to be worth $350 million. The asset was a prime office tower that was originally developed by Alan Bond, and pitched to equity investors on September with a target 7.7 per cent annual average cash yield over five years and 11.8 per cent total return.
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