Eureka Funds Management is in on course to win a mandate of up to $1 billion from Union Investment Real Estate, a subsidiary of Germany’s DZ Bank, as a steady influx of offshore buyers continues to pursue the relatively high yields on offer in Australia’s commercial property market.
According to sources, Union, with €22bn ($32bn) under management, approached three rival firms before entering final stage negotiations with Eureka. The scale of the mandate ranges between $500 million and $1bn, as the German institution aims to amass a portfolio of investment-grade properties in Sydney, Brisbane, Melbourne and Perth.
Eureka, a $3.7bn funds management business led by industry veteran Bob Kelly, declined to comment on the mooted deal.
However Union’s expansion in Australia follows its $200.6m foray into the market earlier this year with the acquisition of an office tower development in Brisbane, underlining the comparative appeal of commercial office yields.
This article first appeared in The Australian Business Review.