Japanese firm Aravest targets $200m Brisbane CBD tower stake

Brisbane offices are back on the agenda for large investors.

Japanese investors are again making the running on a major capital city property deal, with Brisbane’s office market emerging as their latest target.

In one of the largest office transactions of this year, private funds business Aravest, which is now controlled by Japanese groups and led by Matthew Egan locally, is targeting the purchase of a half-interest in the city’s Central Plaza 1 Tower for over $200m.

The stake in the tower is being sold by industry super fund backed-manager ISPT, as part of its wider selldown of assets across the east coast, which has included offices and retail stock.

The latest sale was brokered by Paul Noonan and Seb Turbull of JLL, and they and the parties declined to comment. But the sale of the interest in the tower will spur further confidence in core office buildings in the Queensland capital, which was already firing on the back of large sales in Fortitude Valley.

The building at 345 Queen Street, designed by Japanese architect Kisho Kurokawa, is one of Brisbane CBD’s original skyscrapers and was built during the boom of the 1980s. It has 40 levels of office space with four levels of basement parking.

Central Plaza in Brisbane’s CBD.

The sale of the stake in the A Grade building, which spans 40,446sq m after a 2018 redevelopment, comes as the ISPT Core Fund divests assets nationally.

ISPT will continue to operate as asset manager and will work closely with the local Aravest team on boosting value.

The office tower has undergone an extensive and ongoing refurbishment program to upgrade the building since 2016.

ISPT’s core fund has been recycling capital but is retaining a significant investment in the Brisbane market, including office assets such as 1 William Street, in which it has a half interest.

Aravest, which is headquartered in Singapore, manages a diversified $US9.3bn ($14.3bn) portfolio of real estate assets across Asia Pacific, with key investments in office, hospitality and living, logistics, retail and sustainable infrastructure. ESR last year sold the business – which was then ARA Asset Management’s Singapore-based company’s private fund management unit – as it focused on e-commerce linked assets.

All up, the business manages 22 private vehicles and was bought by a consortium including a unit of Sumitomo Mitsui Finance and Leasing Co and Japanese fund manager Kenedix.

The move, once finalised, will continue the surge of Japanese investors into Australian markets. The office deal is relatively passive and is expected to show a capitalisation rate of over 7 per cent.

Japanese companies have put their stamp on the market by dominating in the backing of new projects, supporting developments across offices, apartments, industrial parks and the newest sectors of build-to-rent and studio living.

Inflows of Japanese capital are driven by the higher growth in the Australian market than they can get at home. But they have also set up a more permanent diversification of their operations so that this market is a long-term part of their strategy.

ISPT purchased the Central Plaza tower, then known as Central Plaza One, in 2007. At that time, QIC split up the three-tower Central Plaza complex in Brisbane’s CBD in a $839.2m sale to ISPT and a Lendlease venture in 2007.

ISPT acquired the Central Plaza One tower for $385m and a Lendlease-managed joint venture paid $454.2m for Central Plaza 2 and 3.