This article is from the Australian Property Journal archive
OPPORTUNISTIC player Elanor Investors Group has snapped up a Brisbane office building for $172 million on an initial yield of 10% from Credit Suisse, which booked a capital gain of only $2.5 million after 12 years, as office values continue to reprice.
ENN has acquired the ATO building in 55 Elizabeth Street for a new commercial office fund, which raised $109 million.
ENN’s co-head of real estate David Burgess said the acquisition presented compelling metrics in the right market at the right time and will deliver deep value returns for its wholesale and sophisticated investors.
“The acquisition price represents an initial yield of 10% and is more than 50% below the property’s replacement cost. The property is well positioned to benefit from the strengthening Brisbane CBD office market,” said Burgess.
ENN CEO Glenn Willis said the group is seeing an increasing number of investment opportunities in the current market such as 55 Elizabeth Street for capital partners.
55 Elizabeth Street is a prime grade asset with NLA of 19,250 sqm. It is fully leased with 97% occupied by the ATO. It boasts a 6—star NABERS Energy Rating and 5-Star Green Star Office Design.
Credit Suisse acquired the asset in May 2011 for $169.5 million from Grocon.
This latest transaction comes hot on the heels of Australia’s richest person, Gina Rinehart, acquiring 175 Eagle Street from Charter Hall for $240 million.
Her other major office building purchase this year, 70 Eagle Street, is a 14-storey building with 11,000 sqm of floor space and retail on the ground level, and a three-level basement car park. Superannuation fund QSuper was the major tenant but the building is now tipped for repositioning or upgrading.
Desire for an improved human experience is driving tenants towards prime-grade office assets. New JLL data shows Brisbane CBD net absorption was essentially flat in the quarter – but the prime sector saw 32,900 sqm of net absorption, and prime vacancy fell into single-digit territory for the first time since the end of 2019.
Transaction volumes of commercial property in Australia sank to their lowest level for a September quarter in more than a decade, with a “fog” on pricing, economic and geopolitical continuing to hamper deal activity, according to MSCI. Rinerhart’s acquisition of 175 Eagle Street shows there is still appetite from investors for high-grade office buildings.
Rinehart has been an active player in the agricultural real estate sector and owns a large-scale agricultural portfolio. Hot on the heels of selling four S. Kidman & Co cattle stations for more than $200 million, in May Rinehart acquired two Wagyu cattle breeding properties in Queensland and NSW from Canberran billionaire Terry Snow for $80 million.
