Department of Defence pays $46m for office property at Osborne shipyard precinct

Supplied Editorial 620-628 Mersey Road, Osborne. Supplied

The property at 620-628 Mersey Road, Osborne.

The Department of Defence has added to its property holdings at the Osborne shipyard precinct in Adelaide’s north with the $46m purchase of an office property on Mersey Rd.

Purpose-built for the Air Warfare Destroyer Alliance and Raytheon in 2010, the property comprises two linked, campus-style office buildings.

They offer 8000sq m of space and are located on a 2.5ha site, which includes 3000sq m of vacant land earmarked for the future development of two additional office buildings.

The property, at 620 Mersey Rd, was offloaded by Australian Unity’s unlisted diversified property fund, with the sale price falling in line with the book value reported at June 30, when it was cut back from a previous valuation of $50.5m.

The fund, which is expected to complete a $1.1bn merger with Cromwell’s direct property fund next month, paid $48.25m for the property in 2020.

Its sale follows the $36.5m sell-off of the Woodvale Boulevard Shopping Centre north of Perth in September, and leaves the fund with a portfolio of six properties diversified across convenience retail, office and industrial property sectors. The fund’s remaining assets include the $144m Caltex Twin Service Centres on the M1 in Wyong, NSW and the $125m Blackburn Square Shopping Centre in Blackburn, Victoria which is currently being developed.

Australian Unity said proceeds from the recent sales had been used to pay down the fund’s borrowings.

The Osborne deal was brokered by Ian Thomas and Alistair Laycock from CBRE and Josh Charles and Simon Kent from One Commercial.

Adelaide developer Prime Space Projects delivered the Osborne facility for the Air Warfare Destroyer program, which came to an end in 2020 when the third and final ship was handed over to the Royal Australian Navy.

The other original tenant, Raytheon, recently developed a new Centre for Joint Integration at Mawson Lakes, which has become its principal production facility in the country.

The Osborne property has since been occupied by Australian Naval Infrastructure, which was established by the federal government in 2017 to oversee the development of new infrastructure at the shipyard precinct.