Investors continue rush into Brisbane office market
Lendlease’s wholesale Australian Prime Property Fund Commercial is weighing up joining the rush of investors lifting their exposure to Brisbane’s office market with a move to take control of the Central Plaza 2 complex in a move that would value it at about $400 million.
The fund already owns a half stake in the tower, now known as 66 Eagle St after it was revamped, but its co-owner, Middle Eastern sovereign fund Abu Dhabi Investment Authority is looking to exit.
This has triggered pre-emptive rights that the Lendlease vehicle is tipped to exercise as it would allow it to go to full ownership on the tower, depending on talks between the pair.
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Considering the move on the building in Brisbane’s Golden Triangle is one of a series off major asset sales underway in the Queensland capital, with more than $1 billion worth of office deals in train as investors buy into the city’s leasing recovery.
A deal may come hot on the heels of the listed Cromwell going into due diligence on 400 George Street, that is being sold by US group Blackstone and HSBC Trinkaus for more than $525 million.
Canadian investor Oxford Properties Group has already sold another building in Brisbane’s George Street to Sydney-based Anton Capital for about $225 million. It is separately selling the city’s Australian Government Centre to funds manager Ashe Morgan Winthrop for about $430 million.
The deal-making indicates the extraordinary first-half resurgence of activity in the Queensland capital could continue into this half.
The latest deal, on the Eagle Street complex, has partly been inspired by the Lendlease-run fund’s desire to capitalise on a leasing campaign capped by Mills Oakley lawyers moving to the top floor of the newly-refurbished building. The Central Plaza Complex consists of three A-grade office buildings with Central Plaza 1 completed first in 1988, followed by Central Plaza 2 in 1990 and Central Plaza 3 in 2008.
The 35,000sqm Eagle St tower that is in play has undergone a considerable re-positioning and sports new landscaping and ground floor, and a lobby with a cafe and state-of-the-art end of trip facilities.
JLL’s Seb Turnbull and Luke Billiau are acting for ADIA. Lendlease declined to comment.
Sales volumes in Brisbane hit $830 million in the first half, a report by CBRE says. The firm notes that some big ticket assets have been offered to the market, and debt costs have also come down significantly. But there could be fewer on-market opportunities in this half.
Trading this year has been evenly balanced between domestic and foreign capital with both benefiting from the lower costs of equity and debt.
However, recent changes to Queensland land tax legislation may lead to foreign capital being less competitive as offshore companies pay an additional 2 per cent land tax on the existing rate of 2.75%, which was also bumped up from 2.5% on assets worth $10 million-plus.
But CBRE says it is also possible that these changes may lead to some foreign groups electing to exit the market.
This article originally appeared on www.theaustralian.com.au/property.
