MGPA, the Europe and Asia focused private equity real estate firm, has announced its first investment in Australian property with the acquisition of a secondary office in Sydney for A$105.1 million (€84.24 million; $109.8 million).
The firm is part-owned by Australia’s Macquarie Bank and the professional backgrounds of many of its senior staff are Australian – the founders previously worked for Sydney-based developer and investment manager Lend Lease. However, MGPA had until now not operated, nor invested, in the country.
Last month the firm opened its Australian office in Sydney and appointed director Hamish MacDonald in charge. The purchase of 6-10 O’Connell Street in the city’s central business district is the first acquisition under his new watch.
Outlining the firm’s strategy for the asset, he said: “We are planning to invest in a substantial refurbishment and we will be focussing on the smaller occupiers, currently less catered for in the core precinct of Sydney, and this ‘buy-fix’ transformation is at the heart of MGPA’s Fund strategy.”
The acquisition is one of the latter outlays for MGPA Asia Fund III, Asia’s largest opportunistic real estate fund which was established in 2007 and for which was raised $3.9 billion. It follows the $152 million purchase of an eight-strong portfolio of offices in Japan following a defaulted CMBS in June.
6-10 O’Connell Street is currently 92 percent occupied by 38 office and six retail tenants. It comprises 172,224 square feet of commercial space.
John Saunders, chief executive officer of MGPA in Asia, described the building as providing the firm with an opportunity to reposition a lower grade asset in “a great location” to grow income and drive value.
Further, in an interview with PERE last month, group chief executive officer Simon Treacy said the firm was in its “early days in assessing the [Australian] market and getting a better understanding of the property fundamentals, particularly the shape and pace of demand in the office sector.” He said that the firm would take its take in assessing deals, adding the firm will be “happy to sit on a rock and pick off the opportunities where we see attractive pricing.”
MGPA was advised on its acquisition by investment advisory group Anton Capital and law firm Clifford Chance.