German funds giant Deka Immobilien is set to pick up prized Brisbane commercial asset 66 Eagle Street for around $370 million after entering due diligence on the golden triangle tower earlier this month.
Deka met price expectations for the 32,000sq m asset, which was offloaded by 50-50 co-owners Lendlease’s Prime Property Fund Commercial and the Abu Dhabi Investment Authority.
The Abu Dhabi Investment Authority made the first move to sell in June, with Lendlease foregoing its pre-emptive right to acquire the remaining 50 per cent stake.
Deka’s acquisition adds to the 50 per cent of cross-border capital deals in Australia over the year, and follows a flurry of activity in Brisbane’s office sector including Shayher’s recent acquisition of the Q&A Centre and Cromwell’s $524 million 400 George Street buy.
Ongoing cap rate compression and historically strong occupation in Sydney and Melbourne’s office markets has made Brisbane’s CBD market an attractive alternative for international capital.
While the macro overlay of low interest and bond rates and growing concerns about a global economic downturn has prompted a “flight to safety” among major institutional funds.
A spokesperson for Deka Immobilien declined to comment on the acquisition of 66 Eagle Street.
The German fund picked up the Canberra Outlet Centre in April for $135 million and Bvlgari’s flagship at 64-68 Castlereagh Street in Sydney for $56 million in 2018.
Its newest purchase, the 23-storey Eagle Street tower, was designed by architect Kurokawa Kisho and recently underwent a $15.1 million capital expenditure program including a new lobby, cafe and forecourt.
The 91.5 per cent occupied building is set on a prime corner with three street frontages in one of Brisbane’s most sought-after corporate precincts. Tenants include QIC, McCullough Robertson and state and commonwealth government departments.
The sales campaign was run by JLL and Cushman and Wakefield—both declined to comment on the deal.