Ashe Morgan seeks partner on Brisbane’s $700m-plus Midtown Centre
A three-quarter stake in Rio Tinto’s new headquarters in Brisbane is hitting the market in the largest single office asset to be offered this year with a transaction likely to value the tower at more than $700m.
The offer of the interest in the Midtown Centre by the private equity and property investment firm Ashe Morgan will be chased by large international groups as it sports top environmental credentials, and local funds are also keen for an exposure to Brisbane’s leasing recovery.
Ashe Morgan would retain management and a substantial stake as part of its model of partnering with large investors.
The Brisbane tower was its largest redevelopment and the company is keen to see it fully leased up and to benefit from keeping a stake.
The move comes as confidence in the office market grows, particularly in Brisbane, Canberra and Perth, which have been relatively unscathed by lockdowns.
Brisbane has seen a run of deals demonstrating the demand for assets and the offer of the tower stake is likely to reset benchmarks in the city.
The interest is being handled by JLL and CBRE and they are likely to capitalise on stiff demand from global institutions for new towers. JLL’s Paul Noonan and Seb Turnbull and CBRE’s Bruce Baker and Flint Davidson are running the process with their Singapore teams.
Ashe Morgan is heavily committed to Brisbane; in 2019 it bought the Australian Government Centre in the CBD from Investa for almost $430m.
The development of the Midtown Centre drew in heavyweight investors. AustralianSuper was the debt funder behind a $360m facility arranged by investment house MaxCap.
Ashe Morgan brought in DMann Corporation to assist in developing the project and had backing from cornerstone investor Peterson Group.
Rio Tinto is anchor tenant and took a 10-year lease. The mining giant occupies 20,000sq m over 11 floors.
The Midtown Centre in the Brisbane CBD spans 45,000sq m of office space by joining two existing towers into a single 26-storey tower, under a Fender Katsalidis design.
The redevelopment of the former Health and Forestry House buildings at 155 Charlotte St and 150 Mary St was a landmark in reusing existing office buildings. It involved the first full merging of two separate office towers in Australia. The groundbreaking design consolidated the 20-storey former Health and Forestry buildings facing Charlotte and Mary streets by infilling the gap between them.
The development was pitched as the start of the reinvention of many older Brisbane CBD buildings.
Fender Katsalidis said compared with a demolish and rebuild scenario, the venture between Ashe Morgan and DMann, achieved a 231 per cent cumulative impact reduction across all environmental indicators, including a 37 per cent CO2 reduction compared to a new build.
The developers also committed with Hutchinson to a minimum recycling rate of 90 per cent construction and demolition waste.