Lastly, given that the rollout of the new Sydney Metro would certainly take some commercial properties out of the market, we believe that the tower would deliver a substantial capital gain either from direct government acquisition or from the reduction in mid-end office property supply in CBD area. We thus made our investment in April 2013.
Centuria, owner of the tower, then successfully removed the 20% of vacant spaces in the tower and increased rents by 20% through improved tenant demand and upgraded tenancies. The property was then purchased by the NSW State Government for its Light Rail Project at a significant premium.
The government acquisition adds to our already successful investment. As a result, we achieved a gross return of 20.9% p.a. over a holding period of 2.6 years.
*The performance was calculated as at 30 June 2018. Past performance is not necessarily indicative of future performance.