Investa Commercial Property Fund ("ICPF" or the “Fund") has announced it has acquired a 50% interest in three properties located at 366, 370 and 380 Queen Street, Brisbane (the “Site”) for future re-development, in a joint venture with Charter Hall Prime Office Fund (CPOF).
Acquired for A$53,750,000 (100% interest), the three separately owned and adjoining office buildings have a combined, existing net lettable area of ~9,400m² sqm and site area of ~2,147 sqm. Subject to Council approval, the acquisition presents an opportunity to develop a new generation, A-grade office tower, with an end value in excess of A$500 million (100% interest), across approximately 45,000 sqm of net lettable area.
The well located site within the Brisbane financial core or ‘Golden Triangle,’ has a significant Queen Street frontage and rear lane access. The co-owners plan to immediately commence work on seeking Council approval and securing tenant pre-commitments.
ICPF Fund Manager, Jason Leong said: “The acquisition supports ICPF’s ‘build-to-own’ investment rationale and aligns with the fund strategy of securing assets that deliver diversification and a future pipeline of value-add opportunities, with the potential to leverage development upside over the next cycle.”
Subject to Council approval, the proposed development will comprise basement car parking, a podium level with gym and childcare, end of trip facilities and retail and office accommodation over 40 levels, with water views and market-leading environmental credentials, including a 5 Star Green Star Design and As Built rating, 5 Star NABERS Energy Base Building rating and a Well Core and Shell Rating to optimise tenant health and wellness.
Peter Menegazzo, Investa’s Chief Investment Officer said: “This is a very exciting investment opportunity for ICPF. Our office experience and expertise, alongside a high quality partner in Charter Hall, presents a fantastic opportunity to create a new generation, high quality building for the enjoyment of Brisbane CBD tenants, deliver a superior return for ICPF investors and make a positive contribution to the Brisbane economy with this significant development project.
The spread between asset classes and markets presents a cyclical opportunity to capitalise on appropriate value-add and development opportunities and this site provides the perfect opportunity at the right time in the cycle,” said Mr Menegazzo.
ICPF has grown significantly in recent years as a result of strong support from both domestic and overseas investors, who have committed over A$1 billion since 2014. ICPF’s recent liquidity offer closed in May 2017 with no redemption applications received.
David Harrison, Charter Hall CEO and Managing Director said: “With a limited number of identifiable development sites and a forecast improving office market in Brisbane’s CBD financial district, amalgamating these sites for future development provides superior returns to alternative stabilised asset acquisitions in the market. The joint venture development and ownership structure with ICPF diversifies risk with a credible institutional counter party.”
Commenting on market conditions, Mr Leong said: “The Brisbane market net supply outlook is low, due to no significant completions and a pipeline of withdrawals. Consequently, vacancy rates are expected to continue to tighten over the coming years.”
Mark Curtin, CBRE Regional Director, Major Projects who was involved in the transaction said: “Increased tenant demand and a significantly more conservative development pipeline over the next 2-3 years should see the prime vacancy rate in Brisbane reach 5% by 2020. Positive demand in the CBD is being driven by the re-centralisation, co-working, technology companies and the public sector”.