This article is from the Australian Property Journal archive
BRISBANE’S 40 Tank St commercial office tower has trebled in value over the past five years, netting Ariadne Australia and its joint venture partner, an entity associated with deputy chairman Kevin Seymour, almost $37 million profit in little more than a year of ownership.
They have just sold the 11-storey building to Charter Hall Long WALE REIT and the Charter Hall Direct PFA Fund for $93.0 million, having paid $56.1 million to Blackstone’s 151 Property Group in April last year.
Blackstone had picked up the asset in 2013 as part of a seven-property office portfolio from GE Capital Real Estate.
It comprises five levels of car parking – operating as Care Park – with 327 bays across 6,218 sqm, ground-floor retail spaces and foyer, and 5,906 sqm of office accommodation across five levels, fully leased to the Queensland state government for Queensland Police Services.
The Charter Hall funds will each hold a 50% interest in the asset.
“This acquisition demonstrates our ability to recycle proceeds from the sale of the Grace property located at Willawong, Brisbane into a higher quality property investment which provides the REIT with stronger tenant quality, a more secure and diverse income stream, with a longer WALE than the Willawong property,” fund manager, Avi Anger said.
The property is expected to benefit from its close proximity to the $3 billion Queens Wharf Casino precinct, expected to be completed in 2022, and the $1 billion Brisbane Quarter development at 300 George St.
“The acquisition increases the REIT’s exposure to the improving Brisbane CBD office market. The property provides optionality to either extend the leases with the existing tenants or redevelop in the future to a new, long WALE property for a substantially larger building,” Anger said.
“We estimate that the underlying land value of the property represents greater than 65% of the purchase price.”
Ariadne said the joint venture’s carrying value of 40 Tank St was $60.7 million, and its 50% share of the uplift, net of completion costs, is around $14.8 million. Settlement is expected at the end of August.
The group said its net profit before tax attributable to members for the 2018 financial year would be between $17.6 million to $19.6 million, compared to the $76.9 million profit for 2017 that included a $67.1 million gain on the sale of Secure parking.
Adjustments to its investment portfolio and foreign exchange movements will contribute to attributable to members before tax as reported in other comprehensive income is estimated be a $7.2 million net loss, compared to the $17.9 million gain last year.
Earlier this month, JPMorgan Asset Management bought the 22-level building at 53 Albert St in Brisbane’s CBD from financial services firm Challenger, at a figure believed to be north of $250 million.
Last week, Mirvac secured Asia Pacific core fund M&G Real Estate as a 50% joint venture partner for its $836 million 80 Ann St tower.
Meanwhile, Texas-based Hines is believed to be looking to tell two Fortitude Valley assets, on Brisbane’s city fringe, as part of a four-asset portfolio worth more than $650 million.
It acquired the six-storey A-grade building at 100 Brookes St in 2012 for $66.5 million from Anthony John Group, and was formerly mining group Bechtel’s headquarters.
Also being considered is the 11-storey 825 Ann St, which includes Macquarie Bank and Laing O’Rourke among its tenants. Hines purchased the asset from a trust owned by Laing O’Rourke Australia in 2013 for $124.67 million.
The group is also looking for suitors for 818 Bourke St in Melbourne’s Docklands, and 465 Victoria Avenue and Sydney’s Chatswood.
Australian Property Journal
