Dexus sells another CBD office
Dexus has struck the Brisbane CBD’s priciest office sale.
Subject to Foreign Investment Review Board approval, 480 Queen Street, will trade to Barings for a gross $700 million.
The net price is $657.3m – in line with the June valuation but a four per cent drop on the December one.
The investment has in recent years lost tenants including law firm HWL Ebsworth, which relocated within Queen St, and John Holland Group, which in June announced it would move to a Newstead office.
Dexus and the Dexus Whole Sale Property Fund (DWPF) paid $543.9m on a funds-through basis in 2013.
JLL agents Paul Noonan, Luke Billiau and Jack Sullivan brokered the on sale.
Also this week realestatesource.com.au reported Dexus sold Investa and BGO 123 Albert St, Brisbane – part of a $715m portfolio also with two Barangaroo, Sydney, offices.
Earlier this year, the group, with Marquette Properties, completed the transformation of 41 George St – formerly the state government’s Mineral House office building – into Australia’s largest office-to-purpose-built student accommodation conversion.
The 27-storey project delivered 1182 student beds in the Brisbane CBD, retaining the existing structure while repurposing an obsolete office asset. UniLodge is the manager.
Brisbane office sale
Completed by Grocon in 2016, the 33-level, Premium-grade office tower at 480 Queen St contains 55,600 square metres and 271 basement car parks.
It is anchored by BHP’s Queensland headquarters and also accommodates tenants including PwC, Herbert Smith Freehills and Allens.
In a retail and lifestyle destination including Eagle Street, Central Station and Howard Smith Wharves, it contains wellness facilities, rooftop event space, end-of-trip facilities, childcare services and conference facilities.
It is renowned for its views of the Brisbane River and Story Bridge (continues below).
Dexus offered it 89.7 per cent occupied by income with a 3.8-year weighted average lease expiry.
Barings executive director of Australian real estate, Shaun Hannah, said Brisbane offered some of the strongest office market fundamentals in the country, supported by population growth, infrastructure investment and limited new office supply.
“The building’s high-quality tenant profile, strong sustainability credentials and significant rental reversion potential make it an attractive investment that aligns well with our value-add strategy,” he added.
“Barings intends to pursue an active asset management and leasing strategy with a focus on enhancing the tenant experience, maintaining the tower’s ESG credentials and capturing future rental growth,” according to the executive.
Partners sell asset
The manager and DWPF each own a 50 per cent stake in 480 Queen St.
For Dexus’s interest, it will receive about $259m on settlement, expected December 1, with a further $70m deferred until mid-2028 attracting a six per cent annual coupon.
“We retain a significant office exposure in Brisbane, focused on the irreplaceable Waterfront precinct with embedded growth options,” Chief executive officer, Ross Du Vernet, said.
This includes the neighbouring Waterfront complex, including 1 Eagle St, which is 93.8pc occupied, and the under-construction North Tower, now 71pc committed, he added.
The sale follows Dexus’ recent half-year results, flagging further non-core asset sales as the group seeks to recycle capital and reduce gearing.
Proceeds from the sale of 480 Queen St are expected to lower look-through gearing by about one percentage point, a statement said.
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