Elanor adds Substantial Office Asset

Elanor Investors Group has agreed terms to acquire 19 Harris Street, Pyrmont for $185 million, reflecting a yield of 4.25%.

19 Harris Street is a high-quality, commercial office building located in one of Australia’s pre-eminent technology hubs that meets the needs of the modern office era. It has best-in-class ESG credentials, being one of only 56 Australian Office buildings with a Climate Active Carbon Neutral certification in addition to a 5-Star NABERS Energy rating.

The property has changed hands over 5 times in 8 years, with each party banking significant gains in value.

The property was originally developed by Lend Lease and sold to the LaSalle Asia Opportunity Fund IV in 2014 as part of a six asset portfolio transaction. LaSalle sold the property in July 2015 to UBS & Grocon for $91.9M who then sold out to AEW Capital Management (the current vendor) in August 2018 for $143m, reflecting a cap rate of 4.9% and a rate per metre of $11,378/sqm.

JLL’s Luke Billiau, Simon Storry and James Aroney acted for AEW in the latest sale to Elenor.

19 Harris Street has a net lettable area of 12,549m2 and is one of only 10 buildings in the Sydney CBD fringe that incorporates large campus style floor plates of 2,000m2, offering complete flexibility for both large and small tenants to grow within the building. The asset has leading digital infrastructure and is one of only 20 office buildings in Australia with a WiredScore rating. The property benefits from extensive investments in solar energy generation, LED lighting and a state-of-the-art building management system that reduces the energy footprint of the building. 19 Harris Street’s tenants enjoy excellent staff amenities including high quality end of trip facilities.

The acquisition of 19 Harris Street will be funded through Elanor’s wholesale capital partners holding 50.1% and a new Elanor Commercial Property Fund to acquire a 49.9% interest, which is a fully underwritten via an entitlement offer.

To fund its investment, ECF has launched a fully underwritten $36.6 million 1-for-8 entitlement offer.

Rockworth Investment Holdings, Elanor’s largest securityholder, will sub-underwrite $20 million of the ECF Equity Raise, reflecting the attractiveness of the investment opportunity and their strong support for the Group.

Additionally, Elanor will make a one-off $8.4 million capital contribution to support ECF’s investment which will result in ECF’s NTA per security being maintained at $1.19, demonstrating the Group’s commitment to grow ECF with value accretive investments.

ECF Fund Manager, David Burgess commented: “19 Harris Street is a high quality commercial office building located in one of Australia’s pre-eminent technology hubs – a differentiated asset with best-in- class ESG credentials that meets the requirements of the modern office era. This investment typifies ECF’s strategy of acquiring assets that have strong competitive advantages in their respective markets – that also have clearly identified value creation opportunities.”

Elanor CEO, Glenn Willis, said: “The 19 Harris Street acquisition is a great opportunity for both Elanor’s private wholesale capital partners and ECF securityholders to capitalise on the strong growth in demand for premium quality office space with best-in-class ESG credentials. This investment is a compelling value creation opportunity with the Group’s strong conviction in the acquisition demonstrated by the Elanor Contribution to ECF.”

Elanor’s FUM will grow to $2.63 billion following the acquisition, representing a 27% increase since FY21.