AMP Capital Global Direct Property Fund has purchased a CBD office tower in Sacramento, California for $29.4 million. The Fund has been an active buyer and seller of US real estate this year as AMP Capital focuses on top tier secondary markets poised for growth that are only just beginning to attract significant capital flows.
Situated in walking distance of the California State Capitol building, 770 L Street is a 13-level, Class A office building of over 15,600 square metres with a strong government and lobbyist tenancy profile. The building has excellent green credentials, being one of only six non owner-user buildings enjoying LEED Gold certification in the CBD.
AMP Capital Global Direct Property Fund Manager Tim Fallet said the property was attractively priced with the opportunity to add value.
“The Sacramento office deal is a high-quality property acquired well below average comparable sales over the last ten years with some of the best vacant space in market. We plan to offer prospective tenants attractive lease rates, providing a competitive advantage over landlords with a higher cost basis,” Mr Fallet said.
“Secondary office markets like Sacramento are poised for growth, driven by strengthening economies. We want to position ourselves ahead of the capital flows, de-risk the asset by capturing a good share of leasing activity to achieve a stabilised 90-95 per cent occupancy profile and resell into a rising market to an investor hungry for core investments.
“Australian real estate is currently in high demand. There’s a lot of domestic and international capital chasing local property but the Aussie market isn’t big enough to absorb these capital spikes. As a result, a number of local super funds are considering an offshore strategy again and we are well placed to assist.
While the Fund currently has a buy-side bias to the United States, we have a watching brief on further investment opportunities in Europe and Asia,” he said.
The AMP Capital Global Direct Property Fund provides Australian superannuation funds with access to core and core plus direct property investment opportunities in large, liquid and transparent offshore markets. The fund invests in a strategic mix of international direct property assets across all the property sectors.