This article is from the Australian Property Journal archive
FORZA Capital has divested a Queensland government-tenanted building for $34.7 million, more than $10 million above what it paid for the South Brisbane asset less than three years ago.
The A-grade building at 55 Russell Street was sold fully leased to three departments of the Queensland government, including Queensland Health, which covers both Children’s Health and the Queensland Aboriginal and Islander Health Council, on a yield of 5%, and a building rate of $8,500 per sqm.
It has a weighted average lease expiry of almost four years, with long-term government tenants having occupied the building for more than 12 years. Queensland Health was attracted to its proximity to both Queensland’s Children’s Hospital and Mater Hospitals.
Forza Capital paid $23.65 million for the asset at the start of 2019 when a third of it was empty. Spanning 4,081 sqm in net lettable area across three levels, the property occupies a high-profile location on the corner of Russell and Edmonstone Streets in the heart of South Brisbane, just over one kilometre from the Brisbane CBD. It has a 6-star NABERS rating and offers 50 on-site car parks.
“Once we had fully leased the property to Queensland government tenants, we then focussed our efforts on environmental initiatives which saw the building achieve a 6 Star NABERS rating, the first existing asset in Brisbane to do so,” Forza Capital director, Ashley Wain said.
“We are very happy with the investment performance on this transaction. We were intending to hold the asset longer term, but when the off-market offer was presented by the Cushman & Wakefield team, it made sense to divest.”
The building sold with significant redevelopment potential, according to Cushman & Wakefield’s selling agents Frederic Le Fanue, Mike Walsh and Peter Court. It has flexible principal centre zoning in place, giving the 2,153 sqm site potential to host a mixed-use tower with a code assessable height of 12 storeys and 1,500 sqm floor plates.
On the buy-side is Barwon Investment Partners, which is acquiring another three-level inner-Brisbane with healthcare tenants. It has just paid $22.45 million for 49 Park Road in Milton, tenanted by the Red Cross, Genesis Care and CDI Lawyers, to be held in the Barwon Healthcare Property Fund. The property has a gross lettable area of 2,500 sqm and traded on a yield of 5.38%, only a year after vendor De Luca Corporation settled on its $13.3 million-plus GST purchase of the asset.
“We are well capitalised and looking to deploy funds into all types of real estate throughout the healthcare continuum from hospitals and medical centres through to disability services and medical offices,” Barwon Investment Partners portfolio manager, Brendan See, said.
Le Fanue said investors continue to seek well-located assets with exceptional lease covenants and track record, which is driving strong demand for buildings leased to health and government tenants
“South Brisbane has enjoyed significant gentrification over the past decade and benefitted from major projects like the $800 million West Village and Fish Lane entertainment area. This backdrop provides exceptional future redevelopment and value-add potential for 55 Russell Street.”
