Weekly Transaction Update - 3rd May


This week we recorded 16 major transactions worth $1.12bn

Mapletree acquire 111 Pacific Highway

The break up of the commercial assets held by Investa (now Oxford) continues with the announcement that Singapores' Mapletree Investments will acquire 111 Pacific Highway, North Sydney for $275.0M.

The A Grade, 24-level building contains 18,668sqm of commercial space and 164 car spaces. According to the June 2018 Investa reports, the building at that time had a WALE of 2.8 yrs generating $10.8M in annual rental income. The external valuation in June was $236M based on a 6% cap rate.

The transaction to Mapletree equates to a rate of $14,731 per square and is expected to be based on a passing yield of under 5%.

The Singaporean group has a strong appetite for city fringe and suburban offices and in October 2018 acquired 67 Albert St Chatswood for $158M and prior to that in 2017 also acquired a $145m office tower at 417 St Kilda Road from an unlisted trust run by Newmark Capital.

For Oxford, the break up of the assets continues with 99 Walker Street North Sydney, and 5 Brisbane assets on the chopping block including; 140 Creek Street, 295 Ann Street, 232 Adelaide Street, 239 George Street and 15 Adelaide Street.

Mirvac have already taken up their 50% interest in 20 Bond Street from Investa following a pre-emptive right process which nominated Morgan Stanley to become a co-owner at a price of $310M.

310 Ann Street Fix and Flip

Cornerstone Properties appear to have succeeded in their fix and flip strategy with a client of UBS Asset Management expected to acquire 310 Ann Street Brisbane for approx $220 million.

The tower, at 310 Ann Street, was overhauled by Cornerstone Properties after it bought the building with JV partner FA Pidgeon & Son for $63m in 2012.

At that time, Suncorp fully occupied the building but vacated in 2015, leaving an opportunity to create a more contemporary product for the current market.

Cornerstore Properties appointed Hutchinson to strip back the building to its skeleton, and completely redefine the asset at a cost of circa $60m. Works included expanded floors plates (from 970sqm to 1,147sqm), new ceiling heights, new floor-to-ceiling glass facade, new amenities, a new 13-metre-high foyer, new streetscape and awnings.

Cornerstone Properties secured new tenants including Allianz Worldwide Partners and the Queensland government.

If the sale progresses at $220m, the $60m investment will certainly have paid off well.

JLL and CBRE were appointed to market the building.

Fortius & Blackrock trade 201 Charlotte St Brisbane

Fortius Funds Management and BlackRock-have secured a buyer for their 16-storey CBD tower at 201 Charlotte Street Brisbane.

The property has been acquired by Kyko Group for $126.7 million, reflecting a 5.94% initial yield.

The A-grade office tower sits on a 1,839sq m site, providing 13,291sq m of net lettable area.

The building was previous acquired by Fortius and Blackrock for $81.5 million in 2015 with a further $5M spent on a recent refurbishments, which has established 201 Charlotte Street as a lifestyle hub, offering childcare facilities, an F45 gym, café, end of trip facilities and a valet car service.

Anchor tenant, resources company Anglo American, recently extended the bulk of its space in the building until 2028 and sit alongside tenants including Zurich, Urbane Homes, Credit Sense and Inter­Financial Corporate Finance, though the building still has a 13% vacancy rate.

Knight Frank and CBRE were appointed to market the property. CBRE indicated that the campaign attracted five bids from local groups and three international offers.

Charter Hall Acquire 121 King William St

Charter Hall’s direct property unit has acquired an Adelaide tower from Blackstone for $82.25 million ($6,628/sqm).

The A-grade building at 121 King William St provides 12,410sqm leased mainly to Ernst & Young (22.6% by gross income) and Jacobs Engineering Group (15.1% by gross income).

Blackstone acquired the tower as part of its $500m-plus purchase of South Australia’s Motor Accident Commission portfolio in 2017. Whilst the Blackstone's price for this specific asset was not disclosed, Knight Frank reported the sale at $58M on a 7.45% cap rate.

Charter Hall also own the nearby 12 Franklin Street which they acquired in August 2018 for $135M ($6,994/sqm). Also reported in 2018 was the sale by Lend Lease of 60 Flinders St for $100M ($6,357/sqm) and 77 Grenfell Street which was acquired by Wingate / IPG fo $103.5m ($6,279/sqm).

Charter Hall also pick up 737 Bourke St

Charter Hall has acquired a second asset this week with the purchase of 737 Bourke Street Melbourne for $192m. The eight-storey A-grade office building sits opposite Docklands Marvel Stadium and comprises 18,500 sqm of NLA and a 4.5-star NABERS Energy rating.

The property is situated next to sits next to Southern Cross Train Station and has on-site cafe and restaurant, an abundance of secure parking and end-of-trip facilities.

The property is leased to Lion Natahan, Victorian Building Authority and Opteon Property Group and has a 98 per cent occupancy and a weighted average lease expiry of 5.5 years.

Charter Hall's acquired the asset at a 5% yield and will house the asset in its $4.5 billion Direct Property business.

The property was sold by Malaysian public services pension fund Kumpulan Wang Persaraan ­Diperbadan­kan, which has been selling down its Australian holdings. It acquired the asset in 2010 for $113m. The fund, which is advised by Investa Property Group, also sold 20 Bridge Street Sydney in 2017 for $330m and still also holds an office tower in Turbot St, Brisbane, which it bought for $172 million from the Morris Property Group.

JLL brokered the Bourke Street deal.

Vantage Sell 420 St Kilda Rd for $92M

Local property group Vantage Property and US giant KKR have agreed to sell 420 St Kilda Rd for $92M to an offshore buyer at a passing yield of circa 4.8%.

The 10,452sqm property has large floor plates of 2,286sqm and sits on a corner site with three street frontages. The vendors acquired the asset from Chip Eng Seng in 2017 on a 5.6% yield with a 9% vacancy for $68m and commenced work to renovate parts of the asset including a new foyer and cafe operator, lift upgrades, new lift lobbies and amenities and new end of trip facilities.

Vantage & KKR leased up the remaining space and after 2 years elected to offer it back to the market with just a 2.3yr WALE.

According to CBRE, St Kilda Road office rents have grown nearly 50 per cent over the past seven years and a staggering 27 per cent in the past 12 months (to Dec) reflecting both the historically tight CBD market and the recent withdrawal of St Kilda Rd stock, according to CBRE research.

Other recent St Kilda Rd transactions include Marprop's purchase of 541 St Kilda Rd for $65m ($7,872/sqm) in December 2018, Abacus purchase of 464 St Kilda Rd for $95M ($6,871/sqm) in April 2018 and 10 Queens Rd for $60M ($6,897/sqm).

CBRE and Cushman & Wakefield managed the sale process.

Review our other transaction data at ReSourceData.

* indicates unconfirmed price or apportionment of a portfolio sale

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Email: warwick@cmaust.com

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