So far, 2014 has seen significant sales in office real estate. Sydney has seen Australia’s most expensive single asset office transaction for the last five years. Meanwhile, Adelaide has been privy to South Australia’s biggest office sale in history.
It’s been a big year for office sales across the country, with investment companies viewing this type of building as a firm investment for leasing.
52 Martin Place (NSW)
The late-July purchase of 52 Martin Place by REST Industry Super from the Queensland Investment Corporation for $555 million is the largest single asset office transaction in Australia for the last five years.
The sale was handled by
CBRE and
JLL, selling on a 5.17 per cent passing yield.
The building itself is well-known as the home of Channel Seven’s morning talk show, Sunrise. The major tenant of the building though is the NSW government on a 33-year average-weighted lease expiry.
REST chief executive, Damian Hill, said the fun was attracted to the property because of its annuity-type returns and not because the soaring tower could be easily classed as a “trophy asset”.
“We don’t invest in trophy assets. That’s not what drives us. What we’re looking at across our options is to deliver a return of CPI plus 3 per cent and we felt this asset enabled us to do that,” Mr Hill told
REST’s purchase of the 36-storey building takes its property portfolio to about $2.5 billion.
Mr Hill said that one of the main reasons REST was drawn to office property over retail was the knowledge of the difficulties that accompany being a shopping centre landlord while also counting many of the tenants as members.
QIC Global Real Estate managing director, Steven Leigh, said that the sale was part of the group’s re-weighting of the fund that held the building. Mr Leigh told The Australian that the interest in the property had been overwhelming.
“At one point, we had almost 40 organisations undertaking due diligence,” Mr Leigh said
CBW Complex (VIC)
One of Melbourne’s largest commercial sales for the year to date is the September sale of the CBW complex by Cbus Property for $608.1 million. Cbus Property is the national superannuation fund for the construction industry.
John Marasco, Nick Rathgeber and Leigh Melbourne of Colliers International, and Ian Hetherington of
Savills arranged the sale.
The buyer is a partnership of GPT Group (GPT) and GPT Wholesale Office Fund (GPTWOF). GPT is a property investment trust, while GPTWOF focuses on high quality office assets. Prior to this purchase, GPTWOF had interests in 18 office assets with a value of $4.8 billion, acquired since its formation in 2006.
Through the purchase, GPT and GPTWOF will each acquire a 50 per cent interest in CBW, also known as ‘Corner of Bourke and William’.
CBW is comprised of:
181 William Street – a 26 level office tower providing 49,833 square metre of accommodation;
550 Bourke Street – a 19 level office tower with 26,257 square metre of accommodation and
·
Goldsborough Lane – 5,313 square metre of ground and mezzanine retail.
70 Eagle Street (QLD)
The Central Plaza 3 tower was sold in April this year to US-based Pembroke for $122.7 million by Lend Lease’s Australian Prime Property Fund Commercial and joint venture partner, the Abu Dhabi Investment Authority.
The building is unique because it is an office building with a long-term government lease. The only other significant building of this kind that was sold this year in Brisbane was the State Law Building.
CP3 is an 11,476 square metre commercial Class A building located in Brisbane’s “Golden Triangle” business district. The building was completed in 2009 as part of the Central Plaza Development and is a 14-storey building that boasts 13 levels of office space and ground level retail.
The building is currently leased to two major institutional investors, QSuper and Queensland Investment Corporation.
Jack Clark, vice president and director of Pembroke Real Estate’s Sydney office has expressed the excitement of Pembroke to further expand its Australian portfolio, which has already taken shape in Sydney with the 2011 acquisition of 20 Martin Place.
“We are excited to enter the Brisbane Market with the acquisition of CPR. We have been looking to expand our Australian portfolio,” Mr Clark said.
“We invest in properties with prime locations in markets with proven real estate fundamentals and long-term growth prospects. While Brisbane is facing near-term challenges, we believe it has these characteristics due to its diverse economy, liquid capital markets and strong population growth.
“70 Eagle Street is not only a high quality asset that strengthens and diversifies our global portfolio, entering the Brisbane market further exemplified Pembroke’s long-term commitment to Australia.”
SachsenFonds Portfolio (SA)
German real estate fund SchasenFonds sold its Adelaide portfolio assets in September to Lend Lease for $175 million.
The South Australian CBD office portfolio comprises three A-grade office buildings and an adjoining eight-level, 700-bay car park complex. The office space amounts to 34,086 square metres and delivers a rate per square metre of $5,134.
The sale was handled by Knight Frank’s Guy Bennett and included 60 Flinders Street, the IAG building at 80 Flinders Street, and car park. The third building in the portfolio is 60 Light Square, occupied by People’s Choice Credit Union.
Savills estimates the yield range being between 8 and 8.5 per cent for the assets.
Lend Lease’s Australian investment management managing director, Kylie Rampa, said it built on the fund’s recent acquisitions in Brisbane and Melbourne.
“The assets are well located, high quality modern buildings,” Ms Rampa said.
The sale marks the largest single office transaction in South Australia.
Septimus Roe Square: 256 Adelaide Terrace (WA)
April 2014 saw the sale of Perth’s Septimus Roe Square by Aspen to Singaporean developer, Far East Organisation for $91 million at an initial yield of 11 per cent.
The 16 level, B-grade building was built in 1976 and has 17,700 square metres of net leasable area, as well as boasting both retail and terrace areas.
The building sits on the eastern edge of Perth’s CBD, on the corner of Adelaide Terrace and Victoria Avenue. Tenants of the building include the WA Police Department, Aurecon Australia, BHP Biliton and Shell Development (Australia).
Aspen’s chief executive, Clem Salwin, has said that the majority of the sale’s proceeds will go towards debt reduction.
“We will also look to commence capital management initiatives, as well as potential reinvestment of capital in the business,” said Mr Salwin.
“We set out to realise Aspen Group’s commercial portfolio in order to reduce debt, to simplify the business and to focus on ‘value for money’ accommodation.”
The sale is indicative of the continued interest in the Australian office markets by foreign investors. This purchase comes after Far East’s purchase of two Sydney properties, and fellow Singaporean group Hiap Hoe’s purchase of 130 Stirling Street in Perth earlier in the year.
21-23 Marcus Clarke Street (ACT)
Canberra’s most significant sale for 2014 has been the July 2014 sale of 21-23 Marcus Clarke Street in Canberra city for $45.01 million at a yield of 7.3 per cent.
The property has 7,503 square metre of net leasable land, with the price per square metre coming in at $5,999. It is an A-grade, mixed-use eight-storey building on the fringe of Canberra’s CBD.
NewActon East Property Fund purchased the mixed-use property in the NewActon precinct. The Fund only acquired the building’s office and retail components in addition to 115 car parking spaces. The remaining three stories of apartments are owned separately.
The purchase will be funded with a mixture of equity and debt. Beginning on 31 December 2014, the Fund will pay quarterly distributions out of income from this asset.
The property is currently manages by
Colliers International, which has a ground floor tenancy and has recently extended its lease for five years.
