Elanor fund buys Surfers Paradise ‘tower of power’

The Cavill Avenue office was constructed in 1991.

GDI Property Group has sold a landmark Surfers Paradise office for more than twice what it paid in 2015.

The 22 level building, 50 Cavill Avenue, at the south east corner of the Gold Coast Highway, is collecting $113.5 million from Elanor Commercial Property Fund (ECF).

The value, below replacement costs, reflects a seven per cent passing yield and 6.8pc capitalisation rate.

Settlement is scheduled on or before August 31.

Both the buyer and seller are Sydney based.

CBRE’s Scott Gray Spencer and Mark Witheriff were the agents.

Site history

Developed in 1991, 50 Cavill Ave is Gold Coast’s biggest commercial building with 16,648 square metres of lettable office area and 446 basement car parks.

It also contains 382 sqm of ground floor retail.

For decades the office was known as the region’s ‘tower of power’ because of its heavyweight tenants, Sunland and Nine, amongst them.

It was purchased by the Chung Group of Companies for $55m in 2004 and put into the hands of receivers eight years later.

GDI paid $48.75m – at the time it was 46 per cent vacant – then embarked on a $16m renovation (story continues below).

The group unsuccessfully tried to offload the asset three years ago with a $105m-plus guide (and despite a December, 2017, valuation of $88.1m).

It was offered this time around 97pc occupied with a 3.1 year Weighted Average Lease Expiry by income.

Price a premium

After costs, GDI is forecasting to net $109m from the sale – a small premium to the ($101m) June 30, 2020, carrying value.

To settle, ECF has commenced an $84.7m capital raising.

“Fifty Cavill Ave is the pre-eminent commercial building on the Gold Coast, a region that is very well positioned for further strong economic growth,” fund manager David Burgess said.

“This investment typifies ECF’s strategy of acquiring assets that have strong competitive advantages in their respective markets,” he added.

Glenn Willis, the chief executive of the trust’s largest shareholder, Elanor Investors Group (ENN), said the property “further enhances the fund’s portfolio of high investment quality commercial office properties invested in favourably positioned markets”.

Up to $10m of the purchase price is sub-written by ENN with the balance ($39.7m) to be funded through debt facilities.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.