This article is from the Australian Property Journal archive
ONGOING take-up of space throughout Brisbane’s CBD office market has prompted the Australian Unity Office Fund to splash out $105.75 million for the fully leased 150 Charlotte St tower.
More than 75% of the building’s income is derived from major tenants Boeing Defence Australia and the federal government with a 5.7-year weight average lease expiry profile.
The price reflects an initial passing yield of 6.7% and capitalisation rate of 6.0%.
AOF acquired the A-grade, 16-level building from Singaporean fund manager TrustCapital Advisors, which acquired the building in 2012 from Stockland for $56 million.
The deal means TrustCapital has now hit agreements for all five of the properties it put to the market in June, which include 469 La Trobe Street, 850 Collins Street and 575 Bourke Street in Melbourne’s CBD, and 50 Pitt Street in central Sydney.
Grant Nicholas, AOF fund manager, said AOF’s acquisition capitalises on an opportunity in the improving Brisbane CBD office market.
“In Brisbane we have now seen 10 consecutive quarters of positive net absorption to June 2017.
“This, coupled with the variance in capitalisation rate spreads between Brisbane and Sydney, makes the acquisition a compelling opportunity for investors in AOF as it nears its 18-month listing milestone,” Nichols said.
Knight Frank’s recent Global Cities 2018 report forecasts Brisbane’s prime office market to achieve a 16.5% rental growth over the next three years to 2020, making it the second best performing city in the Asia Pacific region and outperforming Melbourne and Sydney.
The deal is set to increase AOF’s portfolio’s weighted average lease expiry, occupancy and lease expiry profile.
The fund will undertake a $50 million an equity raising at a fixed price of $2.23 per unit, to partially fund the acquisition, with the remainder sourced from extension to its debt facilities with a new $70 million, five-year tranche.
Australian Property Journal
