Campus converted asset delivers windfall for fund manager
KM Property Funds has sold a major mixed-use inner north west Adelaide investment with development upside for a single asset trust.
Thebarton Square cost $17.25 million in February, 2020, the month before the national lockdown.
Following some small renovations, a change in property manager and – after the pandemic – a range of leases – the collection of buildings and car parks covering 1.45 hectares zoned Urban Corridor (Business) – once the University of Adelaide’s Thebarton campus – it is trading for $22m.
Knight Frank’s Ryan Mills and Max Frohlich brokered the off-market deal to a local investor.
The result reflects a 5.68 per cent initial yield, upping to 6.69pc factoring a rental reversion rate, according to the executives.
“The buyer has a long-term investment horizon and intends to implement value enhancement
initiatives including future mixed-use development,” Mr Frohlich added.
“It is a true inner ring island site, so there is the potential to create something very special on the
property in time”, he said.
Thebarton Square
The campus-style Thebarton Square contains heritage buildings, fit out as swank offices, showrooms and warehouses – all up with 10,714 square metres.
Coca Cola and Gameready are occupiers.
Also with a gym, occupancy is 90pc with a 1.9 year weighted average lease expiry by income (story continues below).
The land – of which c1171 sqm is immediately developable – can accommodate six level residential buildings, in a development hotspot near the 8.4ha ex-West End Brewery, earmarked for a mixed-use project including 1000 dwellings, 20pc allocated for affordable housing, a mix of medium and high density.
Being overseen by Renewal SA, that site is also designed with open space with a cycle and walking track opening to a parkland around the Karrawirra Parri (River Torrens), which will be enhanced.
Development hotspot
Thebarton Square is near the ex-Coca Cola Amatil manufacturing plant which sold in July, 2024, for $23.6m, to Australasian Property Developments which along with two other sites is earmarking a major commercial and residential project.
KM chief investment officer, Mario Papaleo, said the location of its site was “ultimately…the catalyst for strong capital growth for investors coupled with the regular distributions during the hold period”.
The Thebarton Square Property Fund, which held it, delivered an average annual distribution of 6.2pc.
Before tax and other costs, the internal rate of return is 12pc – 27pc over target, according to Mr Papaleo.
Thebarton is about 2.5 kilometres from town.
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