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AMP Capital acquires Melbourne office property for $405m

The Australia-based investment manager has acquired 700 Bourke Street as it continues to build its core office portfolio in Australia.

Sydney-based global investment manager, AMP Capital has acquired an office complex in Melbourne for A$433.5 million (€308.32 million; $405.19 million) from developer Cbus Property. The transaction is expected to deliver a yield of 7 percent over a ten-year period.

The acquisition will initially be funded through a new debt facility, and over the coming months, via the property fund manager’s flagship office fund, AMC Capital Wholesale Property Fund (AWOF), AMP will supplement its outlay by undertaking a capital raising.

“The acquisition is consistent with our strategy to acquire modern, prime office assets in the major Australian CBD markets and is a further example of AWOF recycling capital out of non-core assets into core assets,” Nick McGrath, the fund’s manager said in a statement.

Located in Melbourne’s Docklands, 700 Bourke Street is fully leased to National Australia Bank. The property is considered to be an A-grade asset, with over 678,132 square feet of office accommodation and 8,288 square feet of retail space. Situated next to the Etihad Stadium, the complex also houses a child care centre, auditorium, outdoor terrace and a car park.

The purchase price of the deal represents a rate per square meter of A$6700, which, McGrath said was “below recently comparable transactions in the Docklands.” Following the acquisition, AWOF’s exposure to the core office markets of Melbourne and Sydney will increase to 93 percent.

“The addition of 700 Bourke to the portfolio and the completion of the 200 George Street Sydney in 2016 will ensure AWOF is viewed as a contemporary, high quality portfolio of prime office buildings capable of meeting and shaping the evolution in modern workplaces,” added McGrath.

AMP’s property portfolio largely comprises direct real estate investments and listed real estate investment trusts.

Earlier this year in January, the firm began the redevelopment of the Australian shopping center, Pacific Fair, more than a year after purchasing it through its AMP Capital Retail Trust. Canada Pension Plan Investment Board and Abu Dhabi Investment Authority have invested over $500 million in the trust.