AMP Capital Investors, an Australian investment house with $126 billion in funds under management, is getting back into U.S. real estate.
AMP Capital’s Global Direct Property Fund purchased a small CBD office building
in Boston for $17.6 million to mark the fund’s first U.S. acquisition since the global financial crisis. AMP bought the building with investment manager Urdang Capital Management, the real estate investment specialist for BNY Mellon Investment Management, from an affiliate of AEGON USA Realty Advisors, LLC.
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Managing Directors Frank Petz and Jessica Hughes, as well as Courtney O’Neal, and Matt Sherry, led the Jones Lang LaSalle team that marketed the property on behalf of the seller. JLL also arranged financing for the sale.
"As expected Two Liberty Square attracted significant investor interest from local operators to pension fund advisors and a wide range of institutional capital," said Petz. "Boston has become a favorite market for foreign investors looking to invest in well-located, quality real estate."
Originally built in 1913, Two Liberty Square is an historic office building centrally located in the Boston financial district. The 11-story, 65,678-square-foot building was substantially renovated in 1996-1997 and is currently 81% occupied by nine tenants after leasing 40,406 square feet in the building over the past 16 months.
Tim Fallet, AMP Capital fund manager, said the property provides exposure to what has traditionally been a tightly held investment market.
“Located in the Boston central business district, greenfield sites are non-existent and new office space
is entirely dependent on refurbishment and conversion of established buildings, placing upward pressure on office rents,” Fallet said. “AMP Capital was able to secure the property at a steep discount to replacement value and 25% below the price at which it last traded at the 2007 peak.”
Fallet said it was an opportune time to secure scarce assets in tightly held markets at an attractive price with good growth potential.
“With limited quality stock available in the local market and increasing demand for domestic real estate opportunities by both Australian and offshore buyers crowding the market, many local investors are considering offshore real estate markets to complement their domestic portfolio,” he said.
Fallet added that AMP plans to announce several acquisitions and divestments in the next few months as it seeks to capitalize on what it sees as a favorable stage in the market cycle.
"Clients are telling us that there aren’t too many ways to access the current opportunities we’re seeing in the U.S. and Northern European property markets,” said Fallet.
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