Challenger offloads another Asset
Challenger continues to exit some of its direct real estate assets with the sale of 31 Queen Street to US based AEW Group in a deal worth approx $200m.
31 Queen St is located on the corner of Flinders Lane within the Western Core financial precinct of the Melbourne CBD. The 1976, B Grade building comprises 27 levels of offices, ground floor retail and five levels of parking for 172 cars with a net lettable area of 19,213 sqm.
Challenger held the asset on their books at $164.5M in July 2018 based on a cap rate of 5.25%. The current sale at $200m was reported to have been based on a yield of circa 5%.
Challenger acquired the asset in 2011 for $81M on a equivalent yield of 8.1% and rode the compression in yield whilst generating solid returns. The sale comes after Challenger have sold several other assets over the past 12 months including The Barracks in Brisbane for $162M and 53 Albert St Brisbane for $250M. As at June 2018, Challenger held $2.6Bn in directly held assets in Australia with a further $741M held offshore.
The acquisition by AEW follows their acquisition of 19 Harris St Pyrmont in August last year for $143M at a sharp yield of 4.8%.
The sale to AEW was brokered by JLL.