Clarence secures Brisbane office on high yield
Clarence Property Group is the latest fund manager to make a counter-cyclical Brisbane CBD office play.
After 12 months on the market, the group has agreed to pay $119 million for the 18-level A-grade building, 120 Edward Street, on the corner of Charlotte.
Deutsche asset & Wealth Management, or DWS, was the seller.
It paid Axis $142.65m in July, 2017.
That deal reflected a 5.91pc initial passing yield.
The disposal demonstrates an 8.46 per cent net passing yield – two per cent of the 15,161 square metres is vacant.
CBRE’s Bruce Baker and Peter Chapple were the agents.
In March, we reported Charter Hall and QuadReal offloaded a Brisbane CBD commercial building, 309 North Quay, for $46m, a drop on the $65m it outlaid three years earlier with development plans.
Six months ago meanwhile, the same seller sold 40 Tank St for $73m – $20m less than its outlay six in 2018.
Marquette has also bought a Brisbane city office this year – Mineral House at 41 George St cost it c$120m (story continues below).
That seller, the Al Rajhi Group backed Basil Property Trust, managed by Singapore’s AEP Investment Management, outlaid $159.8m eight years before.
120 Edward Street
Developed by FKP in 2001, when it won praise for its environmental sustainability credentials, and one known as the Crowe Horwath Centre, 120 Edward St was DWS’ second Brisbane investment – after 313 Adelaide St, which it bought in 2015.
Nowadays with signage rights to Findex, Clarence will hold it in the flagship Property Diversified Fund, which also invests in essential services, industrial, retail and residential sub-division.
“We see 120 Edward St as a strategic counter cyclical play in a market we know well and believe is well placed for the future,” the fund manager’s head of Transactions, Ben Somerville, said.
“We have certainly see a softening of yields in the office market nationally but the Brisbane CBD transaction provides a strategic holding in a market that continues to show remarkable strength,” he added.
Chief executive officer, Simon Kennedy, added the outlay is “Well below replacement cost”.
The deal comes nearly 18 months since we reported DWS paid $77.5m for a recently completed office in Melbourne’s inner north east Collingwood.
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