Published in The Australian Financial Review on 30th April 2017, written by Matthew Cranston.

A flurry of major office tower deals totalling almost $600 million have transacted in a week at strong prices signalling further heat in the Australian commercial property market.

The $485 million listed Propertylink Group, in partnership with Goldman Sachs, snapped up 50 Ann Street in Brisbane for $145 million on Friday reflecting a core market yield of 8.18 per cent.

The deal, as foreshadowed in The Australian Financial Review, will see Asian-based investment manager CIMB-Trust Capital sell out after acquiring the building two years earlier from Queensland entrepreneur and Sydney to Hobart veteran Peter Harburg for $131.8 million.

The building is fully leased to the Queensland state government but only for a lease term of another 3.5 years.

Propertylink’s head of property Peter McDonald said the asset provided opportunity.

“The purchase of 50 Ann Street reflects Propertylink’s disciplined approach to the acquisition of assets, based on ground up fundamentals where there is capacity for us to execute our strong asset and property management skills to reposition these assets for core institutional ownership.”

The deal was transacted by JLL and CBRE.

In Sydney, listed operator EVENT Hospitality & Entertainment scooped up several older properties at 458-472 George Street, Sydney, adjacent to its existing QT Sydney, State Theatre and 478 George Street properties for $116 million.

The buildings were offered for sale for the first time in over 30 years via Knight Frank’s John Bowie Wilson.

EVENT Group managing director David Seargeant said there was a high level of competition for the prime position property.

“We have long sought to acquire these buildings to ensure control of the south-eastern corner of George and Market Streets in Sydney and to crystallise the value that can be delivered through a future redevelopment of the properties owned by the EVENT Group.”

The purchase will be funded from a combination of cash and borrowing facilities.

The third major deal to break during the week was the purchase of the Australian Securities Exchange building at 20 Bridge Street for a price of more than $330 million. The passing yield on the building was 3.9 per cent with a capitalisation rate of 4.6 per cent.

 

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