Sydney Metro Office Trust launches with 67 Albert Avenue, Chatswood and 558 Pacific Highway, St Leonards, forecasting a 9.2 per cent year-one distribution paid monthly.
Acure Asset Management has moved on opportunities in Sydney's metropolitan office market, acquiring two exceptionally presented A-grade office towers at 67 Albert Avenue, Chatswood and 558 Pacific Highway, St Leonards.
The assets will seed the newly established Sydney Metro Office Trust, an unlisted fund seeking to raise $183 million from wholesale investors and offering investors immediate scale across two of Australia's highest-performing non-CBD office markets.
The trust is forecasting a year-one distribution of 9.2 per cent per annum, an average distribution of 8.5 per cent per annum over five years, paid monthly, and a forecast internal rate of return (IRR) of 14 per cent per annum after all fees and costs.
Distributions are forecast to be 74 per cent tax-deferred over the first three years, further enhancing after-tax returns for investors.
Buying at the bottom of the cycle
Few sectors have been repriced as sharply as Sydney office over recent years. Rising interest rates, post-pandemic uncertainty around workplace demand and a wave of forced selling have pushed values below their previous peaks and well below the cost of developing equivalent assets today.
Acure believes that window represents the bottom of the cycle and has acted accordingly. Both towers have been acquired at a significant discount to replacement cost and at capitalisation rates rarely seen for quality Sydney office stock.
For investors, that entry point matters: it provides a meaningful buffer against further softening, strong income from day one, and the potential for capital growth as market conditions normalise.
"Opportunities to buy A-grade Sydney office at these yields don't come around often," Acure Asset Management Managing Director Angelo Del Borrello said.
"We've been patient, and we believe we've bought exceptionally well. This is the kind of entry point investors look back on as the right time to have been in the market."
The Sydney Metro effect
The trust's name reflects the single biggest shift in the fortunes of Sydney's North Shore office precincts: the expansion of Sydney Metro.
Chatswood has long been one of Sydney's premier metropolitan office markets, anchored by a major rail interchange and a deep retail and residential catchment.
The extension of Sydney Metro through Chatswood and under the harbour has cemented its position, placing the precinct just minutes from the Sydney CBD and connecting it directly to Sydney's north-west growth corridor.
St Leonards has been similarly transformed. The opening of Crows Nest Metro Station on the precinct's doorstep, combined with the existing St Leonards rail station and the Pacific Highway corridor, has given occupiers a level of connectivity that until recently was the preserve of the CBD.
For tenants, the equation has changed. Businesses can now offer staff CBD-level accessibility with lower occupancy costs, shorter commutes for North Shore and north-west residents, and a precinct lifestyle increasingly supported by new residential, retail and hospitality amenity.
That combination is driving diversified tenant demand across both markets, from professional services and technology firms to health, education and government occupiers.
Supply constraints support the long-term story
Beyond transport, both precincts are benefiting from structural constraints on new office supply.
Planning controls, rising construction costs and the growing shift of development sites toward residential use have limited the pipeline of new office space.
With replacement costs remaining above current values, new supply is difficult to justify, placing existing quality stock in a strong position to capture demand as the market recovers.
A well-leased, well-positioned portfolio
The portfolio has a weighted average lease expiry (WALE) of 3.82 years by income, providing secure, contracted income while retaining the flexibility to capture rental growth as leases roll over in an improving market.
67 Albert Avenue is a 15-storey A-grade tower in the heart of the Chatswood commercial core, while 558 Pacific Highway occupies a prominent position in the St Leonards office precinct.
Together, the properties provide exposure to two complementary markets that share the same fundamental tailwinds: improved connectivity, constrained supply and a growing pool of occupiers seeking quality space outside the CBD.
An opportunity for investors
With its entry price, forecast monthly income and potential for capital growth, the Sydney Metro Office Trust offers investors a rare opportunity to access A-grade Sydney office at what Acure believes is a cyclical low.
Eligible investors can learn more by requesting a copy of the Information Memorandum from Acure Asset Management.
Email: info@acuream.com.au
Phone: 08 9322 5448
This opportunity is available to wholesale investors only.
Acure Funds Management AFSL: 411056
