Heitman forms A$600m JV for Aussie gateway cities

The Chicago firm has teamed up with Abacus Property Group for core-plus investments in the three main asset classes, beginning with a deal in North Sydney.

Heitman, the Chicago-based private equity real estate firm, has formed a A$600 million ($625 million) joint venture to buy real estate in Australia.

The company has joined forces with Abacus Property Group, which is quoted on the Australian stock exchange, to invest in the country’s gateway cities it revealed today.

The first deal for the venture is a commercial office building, 32 Walker St, in North Sydney opposite North Sydney’s train station. The transaction valued at $35.6 million represents an initial yield of 9.6 percent a year. The average weighed lease expiry is around three years.

Heitman said the joint venture was a core-plus offering that would invest in offices, retail and industrial properties. Under the terms of the agreement, each party is putting in equity of up to $266 million with targeted gross assets of approximately $600 million.  Heitman, on behalf of a global institutional investor, will provide 75 percent of the equity and Abacus will provide the remaining 25 percent. Abacus is the local property manager and will share in the asset management responsibilities with Heitman.

Maury Tognarelli, chief executive officer of Heitman, said the venture was part of its global expansion. “In Abacus Property Group we have found a firm with a history of identifying value and delivering results, and that fits well with our focus on making real estate investments that perform well today and that we expect will deliver significant value over time to our investors,” he said.

Abacus specialises in investing in core-plus property. It was founded in 1996 and listed on the stock exchange in November 2002. 

For its part, Heitman manages approximately $23 billion in assets invested directly and indirectly in real estate in North America, Europe and Asia.