Adelaide Street deal puts Brisbane in office market spotlight
Brisbane’s rise to become one of the country’s most active office markets has been confirmed with local group Prime Super and advisor Whitehelm Capital swooping on an Adelaide Street tower for more than $150 million.
The deal, brokered by CBRE, will see the pair snap up 313 Adelaide St from global funds giant DWS Group, that owned the tower for about four years.
The firm, then known as Deutsche Asset Management, bought it from a trust run by Cornerstone Properties for a price in the mid-$120 million range in 2015.
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Local and offshore funds are chasing Brisbane’s office market for the relatively high returns on offer, as pricing in Sydney and Melbourne soars. The Queensland capital is benefiting both from the recovery of resources markets.
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The 21-level office building has four levels of carparking and a central core lift well allowing for flexible fit-out options. Developed in 1986 but refurbished in 2011, the building is in the city’s Golden Triangle.
Interest in Brisbane assets has surged with new towers being proposed and existing buildings trading at record rates. Finance group Ashe Morgan Winthrop, listed players Dexus and Cromwell have featured among the buyers.
CBRE’s Tom Phipps, Bruce Baker and Flint Davidson negotiated the deal, with Matthew Lawrence of CBRE’s Debt & Structured Finance team arranging the debt facility.
Prime Super, that has $5 billion in funds under management, and advisor Whitehelm Capital have a substantial national office portfolio. They recently bought Citilink Business Centre in Brisbane’s Bowen Hills for $76 million.
CBRE’s Phipps says the Adelaide St deal highlighted heightens onshore investor activity in Brisbane following the Queensland government’s decision to introduce a foreign land tax surcharge.
“Investment volumes have remained strong, with domestic investors identifying that Brisbane offers good relative value,” Phipps says.
“Assets providing long term, government-backed income with fixed annual rental increases are particularly sought after in the current low growth environment, as highlighted by the 313 Adelaide St transaction,” he says.
The A-grade building spans a net lettable area of 14,592sqm and a lease expiry of 5.8 years, underpinned by anchor tenant the Queensland’s Department of Transport and Main Roads.
The sale price translates to a core capitalisation rate of about 5.75%.
“Prime Super and Whitehelm were attracted by the quality of the building’s services, amenities and large car park catering for the specific needs of the State Government tenant,” Phipps says.
“The government lease covenant, recent major refurbishment and the fact that the building requires virtually no capital expenditure in the medium term were other key drawcards, as was the building’s strong leasing history.”
Despite the switch to local buyers, German funds manager Deka Immobilien is targeting the purchase of Brisbane’s 66 Eagle St complex from Lendlease’s APPF Commercial and Middle Eastern fund the Abu Dhabi Investment Authority for about $370 million.
Taiwanese-backed developer Shayher Group also bought Brisbane’s landmark Q&A Centre for about $395 million earlier this year.
This article originally appeared on www.theaustralian.com.au/property.
