The Lendlease-managed wholesale fund, Australian Prime Property Fund Commercial (APPF Commercial), has acquired a B-grade office building in Sydney at 10 Spring Street for AUD270m (€180m) from Centuria Capital.

“This is a strategic acquisition for APPF Commercial as it continues to focus on investing in next-generation, sustainable precincts in transport-rich locations,” said Josh McHutchison, managing director of Lendlease’s investment management business.

The unlisted APPF Commercial bought the adjacent 8 Spring Street, in Sydney’s central business district, in partnership with Abu Dhabi Investment Authority (ADIA) for about AUD69m earlier this year. The fund and ADIA also co-own another neighbouring office tower at 1 O’Connell Street.

Josh McHutchison said yesterday that the latest acquisition complements APPF Commercial’s adjacent holdings with its partners, including 1 O’Connell Street, 8 Spring Street, and strategic holdings in 23 O’Connell Street.

But the fund, which had AUD3.8bn under management at the end of June, will own 100% of the latest asset, known as Swire House in Spring Street. It is due to settle on the purchase in four weeks.

Jason Huljich, CEO of Centuria’s unlisted funds, told IPE Real Estate that the price paid for the building reflected its strategic location.

“It sits on an island site in the middle of the CBD, and we had schemes drawn up for redevelopment, which allows a 290 metre office tower, which will be the tallest building in Sydney.’

He said Centuria acquired the building in 2013 for AUD91.6m, when it had a 20% vacancy.

The building is now fully leased, Huljich said, and it has established a record for B-grade office buildings, when it achieved rental of AUD1,200 per sqm in a recent leasing deal.

“Our investors have made three dollars for every dollar invested in our single-asset fund which owns the asset. And they have also received distribution of 8% a year.”