This article is from the Australian Property Journal archive
ALCEON Queensland has sold off a Fitness First building in Brisbane’s northern suburbs for nearly $17 million, completing a property puzzle that began in 2018.
Western Australian group Properties & Pathways is the new owner of the 3,217 sqm two-storey building at 461-463 Lutwyche Road in Lutwyche.
The sale represents the final piece of a property puzzle that was started by Alceon in 2018 with the acquisition of 25 Montpelier Road in the inner suburb of Bowen Hills.
Alceon acquired the Bowen Hills property with the aim of relocating betting agency Ladbrokes’ headquarters to the remaining vacant space in that building. In doing so, it underwrote the lease tail at 461-471 Lutwyche Road and subsequently went on to acquire both 461 and 471 Lutwyche Road.
471 Lutwyche Road was subsequently sold to owner occupier CoAsIt in 2020, while 25 Montpelier Road was sold to Centuria in 2019 for $65.4 million.
Matt Barker and Blake Goddard of Knight Frank negotiated the off-market sale of 461-463 Lutwyche Road.
The commercial office building is on a 2,602 sqm site and has been converted for use as a health and wellness facility. Fitness First has occupied the property for 15 years, with six years remaining on the current lease.
It was sold with a weighted average lease expiry (WALE) of 6.3 years, and net passing income of $1,029,411, for an initial yield of 6.10%.
Barker said the property was attractive to buyers as the income was underpinned by a long-term lease to a highly experienced and long-established Fitness First gym, but it also offered future redevelopment potential.
“The buyer was attracted to the asset due to its long WALE and the strong covenant, with an income stream that will provide Properties & Pathways with solid distributions to their investors,” he said. The Properties & Pathways Trust was oversubscribed in 24 hours by their investor base.
The property’s below-market rental profile provides significant reversion potential, he added.
Large floor plates, ample natural light and a high-exposure corner position provide the opportunity for adaptive re-use for other occupiers including medical, office and other similar uses, while the elevated site has DC2 zoning, providing long-term development potential.
In Melbourne, developer Neometro has just bought a Fitness First facility in St Kilda for $22 million. The 5,000 sqm parcel holds development potential beyond Fitness First’s lease expiring in October 2024.
