State Admin Centre sells for $391 million to investment fund led by Commercial & General

ONE of South Australia’s largest ever property transactions will settle next month for a transaction fee of $391 million and is heading to an Adelaide based buyer.

The State Administration Centre precinct portfolio overlooking Victoria Square will be sold next month to a Commercial & General run property fund for $391 million.

ONE of South Australia’s largest ever property transactions will be settled next month for $391 million and is heading to an Adelaide based buyer.

The sale of the SA government’s State Administration Centre (SAC) huge precinct portfolio includes the SAC, Education building, Wakefield House and the Torrens building which together front Victoria Square, Gawler Place and Flinders Street in the Adelaide CBD.

Also included in the Trust’s $391 million property portfolio will be the SAPOL headquarters at 100 Angas Street, Adelaide which was developed by C&G and delivered to the State Government in 2011.

Property investment manager and developer, Commercial & General (C&G), is behind the purchase and has been attracting funds from Australian and international investors since the precinct was first actively marketed 18 months ago.

C&G managing director Trevor Cooke, said the size and scale of the transaction had been trying.

“Attracting such a large amount of capital is always a challenge, foreign currency and tax can complicate it but the government dealings have been pretty straightforward,” he said.

It had however, given the opportunity to promote SA’s investment appeal to a global audience Mr Cooke said.

“The strong support we have gathered is a signal that SA’s stability and potential is well and truly on the world’s radar – a benefit to the state government in terms of releasing public capital for re-investment here as well as attracting capital and ongoing investment interest from outside SA.”

“There was a time when I would have to explain to people where Adelaide was on the map but we longer have to answer that question,” he said. “In terms of real estate Adelaide is seen as a safe haven.”

Institutional investors have committed 75 per cent of the purchase funds Mr Cooke said with investors primarily from the USA, Europe and Asia.

There remains though an opportunity for mum and dad investors to join in with a $40 million tranche set aside for ordinary investors to benefit from the commitment by the state government to lease back the buildings for a minimum 12 years.

A property trust administered by C&G Wholesale Office Trust and chaired former Tourism Australia chairman, Rick Allert AO, will be underpinned by an initial $60 million co-investment by C&G and offers a targeted average cash return of 8 per cent per annum in the first three years.

“It’s a gold standard, government leased investment, this trust is for individual investors. It’s relatively unique for a wholesale investment transaction to get exposure to these kinds of assets,” Mr Cooke said.

A $60 million fund input from C&G is intended, in part, to offer reassurance for investors Mr Cooke said with C&G keen to grow the assets and add a touch of social responsibility.

“I turn up at the soccer field every Saturday with these investors,” he said. “We also plan to undertake a feasibility study to design, install, own and operate a central energy and recycled water plant (CEP), providing electricity, hot and chilled water, as well as recycled water to all buildings within the precinct.”

“Such an initiative – which can only be considered on such a major site – would serve to showcase SA’s environmental leadership while also contributing to the government’s goals of making Adelaide the world’s first carbon-neutral city.”

The transaction will settle on October 25.