Cromwell strikes $241m Brisbane property deal as it winds up flagship fund
Brisbane has attracted capital as buyers bet on an office recovery.
Listed real estate company Cromwell Property Group is selling two major assets out of its flagship direct property fund with two Brisbane buildings worth $241m.
The move will see it sell off buildings in Creek and Queen streets after saying in September it would wind up the unlisted fund.
It is selling after running a liquidity event for the Cromwell Direct Property Fund in July, with withdrawal requests topping 50 per cent.
The fund owns buildings across Australia, with a focus on Queensland, and has stakes in two Cromwell unlisted trusts. The direct assets are worth $464.95m and the fund stakes take the total portfolio to $542.12m.
100 Creek Street in Brisbane’s CBD.
In one deal, Cromwell will buy the block at 100 Creek Street for $155m, and then launch a new wholesale fund that will own the asset. The Cromwell fund being wound up had acquired the block in late 2021 from ISPT for $184.7m.
The 24-storey office tower is leased to a diverse mix of tenant and sits on a 1722sq m parcel. The deal for the 20,015sq m tower is structured as a call option deed with Cromwell so it can acquire 100 Creek Street for a net price that was a 6.1 per cent premium to the independent valuation at the end of May.
It will then launch the new Cromwell Creek Street Investment Trust, with the deal subject to a successful capital raising.
Separately, the company has struck a deal with fund house Corval to sell a building in Queen Street to that manager for $86.5m. The Andrew Roberts-backed manager will also launch a new unlisted trust, with this one to acquire the block at 545 Queen Street.
Corval has emerged as one of the most active buyers in the capital and earlier this year bought an asset from a Dexus-run trust. It pursues an active management style and believes it can capitalise on Brisbane’s strong office leasing market and better fundamentals.
The deals also show the reset of the city’s values market after they shot up when interest rates plunged during the pandemic. Cromwell bought the Queen Street block in 2021 for $117.5m. It purchased the building from Axis Capital, which had acquired it for about $70m in 2017 after Flight Centre moved out.
Corval is buying the block on an initial yield including a rental guarantee of 9.2 per cent. The vehicle will target a distribution yield in its first year of 8 per cent and overall returns of 15 per cent.
