Sentinel Property Group has bought the Makerston House office tower in the Brisbane city centre for $103 million from ASX-listed Challenger.
The deal – the largest to date for the Brisbane-based syndicator – was struck on a net passing yield of 7.85 per cent. It will be held within Sentinel’s Regional Office Trust, which holds nine assets worth more than $350 million.
Makerston House, situated at 30 Makerston Street at the northern edge of the Brisbane CBD, last sold for $38 million in 2000 when Challenger bought it from listed investment company Ariadne.
The tower, offering almost 15,000 square metres of office space, had a book value of $70.7 million as of June 30 last year.
In January, Challenger secured Queensland Rail as a tenant across 2000 sq m to help shore up some of the vacancy.
Sentinel Property managing director Warren Ebert said Makerston House was “superbly positioned” at the epicentre of some of the city’s multibillion dollar infrastructure projects, including the $5.4 billion Cross River Rail network and the $2.1 billion Brisbane Live precinct.
“This is a fantastic acquisition for Sentinel and is our biggest purchase since the group started 10 years ago,” Mr Ebert said.
“The building is opposite the Queensland Police Headquarters and just 50 metres from Roma Street train station, the only existing CBD railway station that will link to the high capacity Cross River Rail.”
Established in 2010, Sentinel has a total national portfolio of more than 40 retail, industrial, office, land, tourism infrastructure and agribusiness assets with a total value in excess of $1.14 billion.
Whitsunday Resort Hits the Block After Receivers Appointed
Prominent Whitsunday resort Peppers Airlie Beach is once again being offered for sale after a $20 million deal collapsed two years ago.
Management rights as well 59 of the 106 strata apartments in the complex and the resort’s facilities including reception, restaurant, meeting and conferencing venue and a day spa have been put up for sale through agents CBRE.
The 4.5-star Great Barrier Reef holiday destination was built by Latitude Development Group in 2009 for $80 million.
It sits on a 1.8-hectare, north-facing site on Hermitage Drive with views across the Port of Airlie Marina and the Coral Sea Coast, and is managed by french hotel giant Accor, under its luxury brand, Peppers.
In September 2016 Latitude was placed in the hands of the receivers McGrathNicol and the resort was offered to market with an option to acquire it on vacant possession basis.
US hotel giant Wyndham exchanged contracts soon after to purchase the beachside resort for $20 million, well above market expectations of $15 million. However, the deal fell through.
CBRE Hotels’ agents Wayne Bunz, Paul Fraser and Hayley Manvell have once again been tasked with managing the sale on behalf of receivers Matthew Caddy and Jamie Harris of McGrathNicol.
“The Whitsundays’ region has been the subject of renewed investor interest thanks to a strong rebound in tourist arrivals post Cyclone Debbie, and the reopening of island resorts, including Intercontinental Hamilton Island and Daydream Island,” Manvell said.
Included in the sale are 56 one, two and three-bedroom apartments and three villas comprising four to five-bedrooms.
The sale offers the opportunity to sell down the individual apartment stock under a management rights model, whilst also allowing an incoming owner the flexibility to sell the apartments on either a short, medium or long-term basis.
Whitsundays leading Queensland coast hotel resurgence
International hotel booking rates at the Whitsundays Islands bounced back by 10 per cent over 2018 as the region continues its recovery from the devastation of Cyclone Debbie in 2017 and benefited from new hotel and resort refurbishments
The Whitsundays resurgence has been part of a wider improvement across the Queensland coast with was part of a wider improvement seen up the Queensland coast with Port Douglas in the Tropical North, the Sunshine Coast and Hervey Bay opposite Fraser Island enjoying stronger price growth.
The recent re-opening of Daydream Island and the imminent opening of Hayman Island (to be run by Intercontinental) have also been positive for the region.
The Whitsundays once again regained its mantel as the most expensive destination among HPI’s Top 20 most popular Australian destinations for overseas travellers.
Private investor David Kingston is also again looking to sell his 172-room island resort in the Whitsundays, part of the World Heritage-listed Great Barrier Reef.
The resort is situated on the closest Whitsunday Island from the mainland, being only 7 kilometres off the Queensland coastline, situated between Hamilton Island and Airlie Beach.
Credit Suisse Buys Fortitude Valley’s Jubilee Hotel
The Jubilee Place Office development has changed hands in Brisbane’s Fortitude Valley.
A real estate fund managed by Credit Suisse Asset Management has pre-purchased Jubilee Place, at 470 St Pauls Terrace, through a forward funding transaction.
The 14-storey Blight Rayner-designed project, developed by private Brisbane property development and investment company JGL Properties, includes the preservation and refurbishment of the existing historic Jubilee Hotel along with the construction of an A-Grade commercial office tower.
Credit Suisse Asset Management APAC head of real estate Christopher Chiang described the acquisition as “an attractive investment proposition”.
“Aligned with our strategy of strengthening our real estate allocation, to best in class commercial buildings in urban areas experiencing strong growth,” Chiang said.
The project team for the development includes national builder Watpac, TB’s Hotels, Robert Bird Group, Inhabit, Floth and Herbert Smith Freehills.
The heritage-listed Fortitude Valley hotel was built from 1887 to 1888 and designed by Richard Gailey.
The transaction is centred within the state government’s Bowen Hills Priority Development Area (PDA), part of Brisbane city’s northern fringe.
The precinct is undergoing revitalisation, with the PDA overseeing the long-term development of 23,000 new homes and one million square metres of commercial and retail space.
JLL’s Seb Turnbull and Luke Billiau negotiated the pre-sale deal in an off-market expressions of interest process.
Turnbull said Jubilee Place was “well received” by investors due to the specifications of the building and the strong market fundamentals of no supply and the vacancy rate trending towards 5 per cent.
The project will comprise 17,500sq m of commercial space and an 800sq m landscaped roof terrace.
“The jewel of this project is the re-development of the iconic Jubilee Hotel which first opened its doors to the public in 1887, delivering an exciting and authentic retail ground plane for the building occupants,” JGL managing director John Livingstone said.
Works are expected to commence this month.
Activity ramps up in Brisbane’s Golden Triangle
Investment in Brisbane’s office market has hit its highest level since the GFC with $2.8 billion spent over the past financial year as activity in Brisbane’s Golden Triangle ramps up compared to other financial districts where transactions remain subdued.
Brisbane’s Golden Triangle, bordered by Eagle, Queen and Edwards Street, clocked up five major office-tower sales in the last financial year, with another five on the market.
The biggest sale recorded over the past financial year was 201 Charlotte Street in May to Sydney-based investor Kyko Group for $126.7 million, on an initial yield of 5.94 per cent.
The latest office tower to hit the market in the Golden Triangle is a 14-storey, 5700-square-metre building at 410 Queen Street, which is expected to sell for more than $50 million.
Perth-based investor RG Property bought the corner property in 2011 before spending more than $5.5 million upgrading it.
“This investment has come towards the end of its desired eight-year cycle. We remain acquisitive and are looking to re-allocate capital towards other value-add opportunities within the Brisbane market, in addition to other projects we have around the country,” RG Property’s Rhett Williams said.
Investment in the Brisbane office market has gone gangbusters with a total of $2.8 billion spent over the last financial year, according to Cushman & Wakefield’s Mike Walsh. He is selling the property with Peter Court along with CBRE’s Tom Phipps, Peter Chapple and Jack Morrison.
“With ongoing institutional investment into the precinct, we expect investor interest for assets specifically within the Golden Triangle to remain heightened,” Mr Walsh said.
Several of Australia’s largest landlords have invested in the precinct, including Dexus, which owns a 32-level tower at 480 Queen Street, and Charter Hall and Investa, who have proposed to build a 40-storey tower at 370 Queen Street.
Meanwhile Lendlease and the Abu Dhabi Investment Authority have joined forces to sell their asset in the Golden Triangle – a 30-floor building at 66 Eagle Street – which is understood to be worth about $370 million.
Compared to five sales in the Sydney core financial district in the first half of this year the Golden Triangle has recorded three, which, relative to the small area it encompasses, is punching above its weight.
“In Sydney, while 2019 is on track to record fewer CBD core transactions than last year, there have been a few landmark ones such as the 50 per cent stake in the MLC Centre and the recent 50 per cent stake in Chifley Tower,” Rhys Byrne senior research analyst at Cushman & Wakefield said.
Mr Byrne said there was significant demand from foreign capital looking to invest in Australia as bond yields and central bank cash rates around the world trended downwards, and that Brisbane was particularly attractive, given the potential yields on offer.
“Of the 10 transactions in Brisbane’s Golden Triangle from the start of 2018 to the midpoint of 2019, 81 per cent of the volume was from foreign investors. That fits the broader trend that we are seeing in the national office market, where foreign investment in office property increased to 49 per cent in FY19,” Mr Byrne said.
CBRE’s Mr Chapple said the broader Brisbane office market was going from strength to strength as vacancy rates continued to contract as the leasing market benefited from strong population growth.
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