This article is from the Australian Property Journal archive
Brisbane based property trust Trinity Group has created property’s "holy Trinity" by combining four adjoining buildings on a prime corner in Brisbane’s central business district into a $76.6 million package.
Trinity said yesterday the buildings were within Brisbane’s “Golden Triangle” located on the corner of Queen and Wharf Streets combining a site area of 2729 sqm.
Trinity reported that the current combined net letable area is 15,216 sqm returning an annual income of around $5.1 million.
TCQ chief executive Ben McCarthy said the future commercial redevelopment site was earmarked for the group’s listed Trinity Stapled Trust and would provide a strategic long term holding.
McCarthy said the assets form one of Brisbane’s CBD’s premium redevelopment sites presently delivering a strong holding income until the time is right for a new project.
“The buildings are currently fully leased however a vast majority of the leases are expiring or up for market rent reviews over the next 24 months.”
“This will allow us to lift the buildings’ rents to current Brisbane CBD market levels and realise strong short term growth in the net income across the four properties.”
McCarthy added that while the portfolio was being acquired on a relatively low initial yield, the record low Brisbane CBD vacancy rate and limited supply presents the opportunity for strong rental reversions upfront.
“We expect to increase the current average gross rental rate of $300 per sqm across the four buildings to $450-500 per sqm which provides for exceptional rental reversions.
“Despite the sharp initial yield, the reversion is quick and the purchase price on a per square metre basis is well below current replacement costs.
“Our projected reversionary yield for 2009 is in excess of seven per cent and exceeding eight per cent by 2010,” he said. “This represents excellent holding income with redevelopment upside.”
The most recent Property Council of Australia office market report reports that the current vacancy level in the Brisbane CBD has fallen to 1.7%.
McCarthy added that the acquisition is a prime example of Trinity’s ability to secure premium investment opportunities with both upfront returns and long term potential to bolster the Group’s pipeline.
“This purchase allows us to acquire four adjoining assets with strong holding prospects and excellent long term redevelopment potential in a rising market,” McCarthy concluded.
Recently, TCQ returned investors a distribution of 5c per stapled security an increase of 25% from the previous half year DPS.
Trinity’s net profit for the first half after tax was $11.03 million.
Trinity expects to reach the magical $1 billion of funds under management by 2009.
Australian Property Journal
