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Castlerock Picks Up Townsville Office Tower for $93m

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Melbourne-based fund manager Castlerock has picked up an office building in far north Queensland for $92.8 million, a record commercial transaction for the city of Townsville.

The office tower, located at 445 Flinders Street, was sold by Flight Centre co-founder and property developer Jim Goldburg after delivering and holding the building under his development company Verde Property since 2009.

The 11-level building is 90 per cent leased to the Queensland government until September 2028, with a five-year lease renewal option.

The 11,383sq m A-grade commercial building is occupied by the Department of Transport and Main Roads, the Department of Natural Resources and Mines and the Department of Health and Education.

The building includes an additional 252sq m of retail at ground level and three-level podium carpark with 195 parking bays.

Colliers Townsville managing director Peter Wheeler said the transaction, at a yield of 6.9 per cent, represented a fantastic outcome for the city's commercial property market and economy during a time of national and global hardship.

Wheeler also noted that settlement was pushed forward two months to the end of March due to a faster than expected influx of investors targeting long-term sustainable assets with strong and stable leases.

New owner Castlerock has more than $450 million total funds under management and 36 government-leased properties in its portfolio.

The fund manager's director Adam Bronts said interest in its funds had remained strong off the back of coronavirus crisis as investors targeted regional properties that delivered income certainty.

“Funds or properties with a stable income and low debt ratio will continue to perform well for investors at this time.

“We can see from the activity in market that investors seeking certainty around returns.

“The purchase of Flinders Street in Townsville is our largest asset acquired to date and confirms our approach to purchasing long-term sustainable assets with long-term government tenants.”

The Townsville purchase comes 18 months after Castlerock acquired 44 Nelson Street in Mackay for $52.4 million, which will be leased to the Victorian government for an initial term of 15 years.

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Article originally posted at: https://theurbandeveloper.com/articles/appetite-increases-for-government-anchored-assets