This article is from the Australian Property Journal archive
WARREN Ebert’s Sentinel Property Group has taken advantage of repricing in the office market by purchasing a Brisbane building for $72 million – on a yield of 9.34% and significantly below the replacement cost.
Sentinel has acquired RACQ House from the motoring club RACQ, which occupies the building and put it on the market for the first time in 10 years.
RACQ acquired the property December 2014 from AMP Life for $60 million.
Ebert said the acquisition is part of the group’s counter cyclical strategy and the acquisition price is well below the estimated replacement cost of $152 million.
“The non-listed real estate investment trust (REIT) has been aiming to pursue more assets, with current conditions ideal for buyers. The key to Sentinel’s success over the years is a proven track record of counter cyclical investing.
“There are better conditions now for those able to buy than in the GFC. We are seeking mis-priced assets from motivated sellers, and we look to improve the property with our hands-on management and administration,” he added.
“Another major influence on the commercial property market is the cost of building. In Queensland, the state government is committed to spending many billions of dollars on infrastructure in the lead up to the 2032 Olympics, and the work is tied up with union contracts. Nothing else of scale is going to get built in Queensland cities in the coming years, particularly new office buildings and shopping centres, while the state continues to experience significant population growth.
“We expect there to be enormous price growth for existing assets and strong rental growth. We are aiming to pursue more office, retail and industrial assets,” said Ebert.
JLL’s Seb Turnbull, Paul Noonan and Kate Low handled the transaction.
RACQ House is located at 60 Edward Street, occupying a prominent 1,836 sqm site on the fringe of the Brisbane CBD’s Golden Triangle. The 15 levels building comprises 10,637 sqm of space and has a 5 Star NABERS energy rating.
Sentinel raised more than $50 million to fund the acquisition with the property to be held in the new Sentinel 2032 Investment Fund.
This purchase follows Sentinel’s $80 million acquisition of two office buildings in Botanicca Corporate Park in the Melbourne CBD fringe earlier this year, for almost 33% below replacement cost and a 39% discount on the property’s April 2022 book value of $132 million.
The building also offers more than 100 car parking spaces and is leased to RACQ and the Commonwealth Government. It is located less than 250m from the new Albert Street Cross River Rail Station.
