Mater buys office, flips it with a leaseback to CQE for $122.5m

Mater bought the unbuilt Newstead office from Silverstone Developments, structured itself a 10-year lease, then at exchange yesterday, onsold it to a Charter Hall Social Infrastructure fund for $122.5m.

An office under construction in Newstead has sold twice on the same day to wind up in the hands of Charter Hall Social Infrastructure REIT (CQE) which will pay $122.495 million upon completion mid-next year.

Mater Misericordiae Limited was the vendor: in a windfall deal many tenants could consider, it agreed to buy the vacant building from Silverstone Developments then structure itself a 10-year leaseback so that upon exchange yesterday, it was flipped to the Charter Hall Social Infrastructure managed fund.

The yield for 14 Strattan St was 4.84 per cent.

One agency represented the not-for-profit.

The 11-level, A-grade 9088 square metre workplace will become Mater’s headquarters.

Established in 1906 and four years ago incorporating several business lines under one group, the occupier manages a portfolio of hospitals, healthcare centres and research institutes.

It presently calls South Brisbane its base.

Deal adds a capitalised healthcare tenant to CQE’s portfolio: Charter Hall

As part of its rental agreement, Mater will fit out 14 Strattan St.

It will also pay fixed three pc annual rent increases.

In 2031, it will be presented with the first of its two five year options.

“The acquisition introduces a new and well capitalised healthcare tenant to CQE’s portfolio,” a Charter Hall Social Infrastructure statement said (story continues below).

“The building is currently under construction with settlement to occur following practical completion, expected to be in the June 2021 quarter”.

Part of the office will act as a training campus.

“The site is centrally located in Newstead, approximately 2.6 kilometres north of the Brisbane CBD,” Charter Hall Group managing director and chief executive officer, David Harrison, said.

“The Newstead precinct has undergone significant urban renewal over the past decade with the immediate surroundings characterised by modern mixed-use developments.

“We are excited about establishing a relationship with Mater as a major tenant customer within our growing Social Infrastructure portfolio, further reinforcing our commitment to grow our reach with major providers of Social Infrastructure services.

“We have invested in this near-Brisbane CBD location for a decade having developed the $230m headquarters for Aurizon at 900 Ann St, Fortitude Valley and the $240m Bank of Queensland anchored office project at Newstead nearby.”

Mater chief executive officer Dr Peter Steer said “it is critical for our business that we can offer a more contemporary environment for our staff, as well as creating opportunities to enhance our hospital campus infrastructure”.

It was represented by Cushman & Wakefield’s Peter Court and Mike Walsh.

CQE fund manager Travis Butcher said the Newstead acquisition would near-treble the fund’s income from non-childcare centres (to 11pc).

It also increases net gearing 1.3pc to 25.6pc.

“This investment is consistent with our strategy of enhancing income sustainability and resilience by improving the quality of tenants and leases within a diversified social infrastructure portfolio. This is an exciting opportunity for CQE to gain exposure to the highly resilient health sector and also opening up future partnership opportunities with Mater,” according to Mr Butcher.

The office, due for completion next year, includes balconies (above) and a double height entrance (bottom).

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Marc Pallisco

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

Marc Pallisco