This article is from the Australian Property Journal archive
CENTURIA has acquired the IBM Tower Brisbane’s CBD for $89 million, taking the platform’s property acquisitions beyond $675 million this financial year and continuing the record run of major commercial deals in the city.
The 15-storey building at 348 Edward St was bought from US group Hines, which made a tidy profit on the deal having paid around $50 million in 2016 for the asset and undertaking a refurbishment one year later.
Centuria will place the tower in a new unlisted fund, taking the platform’s assets under management to $6.6 billion. The new fund is expected to launch this month with a forecast FY20 distribution yield of 6.25%, growing to 6.50% in FY21. The building has a 5.1 year weighted average lease expiry and is 89% occupied, underpinned by ASX listed and multinational tenants.
Located 60 metres from Central railway station, 348 Edward St is also close to Brisbane Private Hospital, Brisbane Magistrate Court and the regenerated Queen Street Mall precinct.
Jason Huljich, joint chief executive officer of Centuria, said, “We are pleased to be offering another high quality fund for our investor base. 348 Edward St is a well located, attractive asset close to surrounding amenity and transport infrastructure.”
“This transaction grows our unlisted fund opportunities to $216 million in FY20 year to date.”
Centuria’s listed office trust, Centuria Metroplitan REIT, has just committed to acquiring two A-grade office assets in Sydney and Perth for $380 million and successfully completed a $206 million institutional placement and entitlement offer in September supporting the purchases.
Centuria’s listed industrial REIT, CIP, has also settled four recent acquisitions for a total consideration of around $80 million in the current financial year. Most recently, it bought a 13,000 sqm industrial facility in Adelaide’s Edinburgh.
“These acquisitions are an integral part of our group strategy to accelerate AUM growth and we expect to continue this momentum by executing on further attractive opportunities across our real estate platform,” Huljich said.
According to Knight Frank research, Brisbane CBD office investment volumes in the year to September tallied $2.86 billion, around $1 billion higher than 12 months earlier, assisted by Oxford Properties’ purchase of former Investa assets last year an allocated $593 million, and their subsequent on-sale for circa $650 million.
The second tranche, The Complex (on Ann St and Creek St), is under contract to Ashe Morgan for a gross price of around $435 million, settling in October.
Last week, Malaysia-based investor HCK offloaded 116 Adelaide St in the Brisbane CBD for about $30 million, while a real estate fund managed by Credit Suisse Asset Management acquired the Jubilee Place office tower project, at 470 St Pauls Tce in Fortitude Valley, for as much as $200 million from JGL.
The record-setting pace for transactions is expected to continue as another $420 million of assets hitting the market. Lendlease and the Abu Dhabi Investment Authority are looking to offload the 30-level tower at 66 Eagle St, valued at about $370 million, while RG Property is looking to offload the 14 storey office tower at 410 Queen St with hopes of over $50 million.
Cushman & Wakefield estimated that $2.8 billion of investment was recorded across Brisbane’s office market over 2018/19, marking the highest volume since the GFC.
Knight Frank found yields in Brisbane’s CBD office market have continued to tighten, compressing by 23 basis points, although the pace of contraction is reducing. They continue to sit at a favourable 95 basis points higher than those in Sydney.
The CBD underwent a period of faster yield contraction from mid-2017 into
2018 as rental growth prospects firmed due to sustained tenant demand improvement, it said.
