Investa Commercial Property Fund ("ICPF" or "The Fund") has today announced it has exchanged contracts to acquire 259 Queen Street, Brisbane (the “Building”) from Grosvenor. The 100% interest is being acquired for approximately A$173 million at an 8.5% passing yield and will result in the Fund’s total assets under management increasing to over A$2.1 billion.
Situated in a prime location in the Brisbane CBD’s ‘Golden Triangle’ adjacent to the Brisbane GPO, the 16-level building comprises 24,789m2 of net lettable area. Currently 98.8% occupied, the building has large 1,500m2 – 1,600m2 floor plates, 142 car parking spaces and a 4.5 star NABERS Energy rating. Completed in 2004, key tenants include Bank of Queensland and the Commonwealth and Queensland State Governments.
The acquisition follows an active period for ICPF, which has grown significantly since 2009 as a result of strong support from both domestic and overseas investors, who have committed over A$700 million in new capital, enabling a series of strategic acquisitions at attractive points in the cycle.
In February this year ICPF purchased a 50% interest in Premium grade office building 567 Collins Street, Melbourne from Leighton Properties for A$231 million. Prior to this, the Fund acquired or increased its interest in some of Australia’s flagship buildings, including 126 Phillip Street, Sydney, 120 Collins Street, Melbourne and 400 George Street, Sydney. At the same time the Fund has divested a number of non-core assets including 231 Elizabeth Street, Sydney.
Commenting on the acquisition, Peter Menegazzo, Fund Manager ICPF said: “259 Queen Street is a property with sound fundamentals, in a prime location adjacent to the GPO, providing large efficient floor plates and high quality, A-grade space for tenants.
We plan to further enhance building amenity with the immediate installation of new end of trip facilities and refurbishment of the entry foyer. We are confident that these improvements, combined with the building’s inherent quality and locational appeal will attract quality tenants, despite competitive leasing market conditions.”
Mr Menegazzo said that while planned new developments will add to the Brisbane CBD supply pipeline in the near term, the favourable expiry profile of 259 Queen Street means it will likely be fully leased up prior to the completion of these projects. The building has already been shortlisted by a number of high profile users.
“This acquisition diversifies our portfolio in a new part of the Brisbane market and complements our holdings in Sydney and Melbourne.Going forward, we will continue to enhance value across the portfolio through active investment and a continued focus on identified strategic priorities, including the sale of Kings Row in Milton,” said Mr Menegazzo.
Campbell Hanan, Group Executive at Investa said: “The acquisition of 259 Queen Street has been strongly endorsed by ICPF unitholders and validates ICPF’s position as one of the country's leading unlisted office funds.”
Chris Taite, Group Investment Director, Grosvenor Group said: “This is a very pleasing result for Grosvenor and we are looking forward to re-investing in Australia indirectly with specialist third parties.”
Geoff McIntyre and Seb Turnbull from Jones Lang LaSalle were the agents handling the sale.