Corval strikes out with $115m tech park deal

A fund manager backed by Andrew Roberts has swooped on a major Brisbane office portfolio.

The listed Dexus Industria REIT has hooked a buyer for the bulk of the Brisbane Technology Park, with funds house Corval planning to acquire a portfolio of the buildings in the precinct for $115.2m.

The funds manager backed by property tycoon Andrew Roberts is swooping on the portfolio of buildings in one of the larger office transactions in the city this year. It will effectively pick up a substantial portion of the park, buying seven of the eight properties in the portfolio, with other groups chasing the remaining elements.

The purchase price reflects an initial passing yield of 7.7 per cent, which increases to 10.1 per cent, assuming the portfolio is fully leased at market rents, according to documents obtained by The Australian.

The fund manager is setting up a new unlisted fund, the Corval BTP Trust, to acquire the portfolio of seven properties located in the Brisbane park at Eight Mile Plains.

The strongly performing business park was set up in 1987 as a Queensland government initiative to foster growth in knowledge-based industries. It now houses more than 200 tenants across the life sciences, medical, technology, construction and government sectors. Tenants include Johnson & Johnson, Woolworths, Anglicare, Bayer, Toshiba and Queensland government departments.

Corval is buying at a time when the Brisbane office market is performing well, with relatively robust demand and constrained supply due to the jump in construction costs.

In a sign that it is in demand, the Brisbane Technology Park sports the lowest vacancy of all office submarkets at just 2.8 per cent.

The rate per square metre across the portfolio is $4645, which Corval considers low for a suburban portfolio with so much parking, and reflects a 40 per cent discount to replacement cost.

The portfolio comprises mostly two to three level business park buildings, with quality office space and parking. It also houses life science facilities, laboratories, warehousing, childcare, a cafe and a vacant land parcel.

Corval will undertake a value-add strategy for each property and will ultimately sell them off individually in order to drive higher pricing than a portfolio sale. It is now seeking equity of about $73m to buy the portfolio, with a distribution yield starting at 7 per cent and averaging 8 to 9 per cent over the trust’s term.

CBRE’s Jack Morrison and Peter Chapple and MP Commercial’s Peter Court and Mike Walsh are handling the portfolio. But they declined to comment.

Corval has been active this year and it snapped up a stake in an industrial property in Sydney’s western suburbs worth $103.5m to seed a new unlisted trust. The RF Corval Industrial Infill Trust 2 bought the complex in Girraween, which houses a poultry processor and supplier, alongside two other RF Corval clients.

Dexus Industria REIT fund manager Gordon Korkie said the move was in line with strategy. “Brisbane Technology Park’s potential divestment aligns with Dexus Industria’s long term goal to become a pure-play industrial REIT,” he said. “We continue to assess capital redeployment opportunities into higher growth industrial assets on the east coast.”

The move had been flagged to the market and will aid in its objective of becoming a focused industrial REIT. Dexus had made efforts to boost occupancy of the asset and at the end of December it had 17.6 per cent like-for-like income growth across DXI’s investment in the park.