Morgan Stanley's core Asia fund invests in Melbourne office market

Prime Property Fund Asia, an open-ended core fund run by Morgan Stanley Real Estate Investing (MSREI), has bought a 50% stake in an office building in Melbourne for close to AUD140m (€95m).

A source confirmed that the core fund, managed from Singapore, acquired half of the nine-storey tower at 664 Collins Street on a yield of 5%.

The seller is Mirvac, a listed property company, which is retaining the remaining 50%.

The 26,000sqm building is part of a complex being developed by Mirvac in Docklands, an extension of the Melbourne central business district. It is due to be completed in 2018.

The complex is positioned at the nexus of Melbourne’s major transport infrastructure, including Southern Cross Station and the Etihad Stadium.

Mirvac has pre-leased more than 60% of the tower to anchor tenants, including the Australian professional firm Pitcher Partners, and the multinational oil company ExxonMobil.

Pitcher Partners has a 12-year lease for more than 9,000sqm of space. ExxonMobil plans to relocate its head office to the building, where it will occupy up to 7,100sqm across three levels.

MSREI was unavailable for comment.

The Melbourne building is the Asian core fund’s second purchase in Australia.

The Prime Property Fund Asia, launched in late-2015, is approaching the US$1bn market.

It was created to mirror MSREI’s long-running open-ended core fund in the US, the Prime Property Fund.

The Asia-Pacific fund has been building up a portfolio in key gateway cities in Asia-Pacific.

It made its maiden acquisition in Australia just over a year ago when it bought One Shelley Street in Sydney in partnership with Charter Hall Group for AUD525m from Brookfield Properties Partners.

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