Properties & Pathways divest inner city office
Properties & Pathways has offloaded a low-rise Fortitude Valley office fit out as a Torrens University campus.
The fund manager is banking $9.725 million – reflecting a 9.3 per cent yield – from a local private investor for 123 Gotha Street, on the corner of Agnes.
It paid $9.22m in October, 2017 – a property cycle peak.
Properties & Pathways managing director Carl Doggett said the asset delivered bulletproof cashflow despite COVID and, more recently, the rising interest rate backdrop.
“Ultimately it was a bittersweet sale as the area is obviously gentrifying and dominant corner positions like this don’t come around all that often, however we put our investors first and decided to recycle some of this capital into other investment opportunities,” according to the executive.
“The same reasons which attracted us to the asset many years ago are still true today and we wish the incoming purchaser all the best,” he added.
The sales comes two days since we reported Properties & Pathways acquired a Logan Central medical centre, 22 kilometres south of the Queensland capital, for $12.19m, reflecting a 6.78pc return.
Last November, meanwhile, the fund manager offloaded a portfolio of six industrial assets – four in Brisbane – for $73.5m.
123 Gotha Street
The Gotha St office contains 1638 square metres of A-grade area and 23 car parks.
The site spreads 902 sqm.
Torrens – which was in 2020 bought for $800m out by US-based Strategic Education Inc – is on a lease at 123 Gotha St expiring in less than two years (its rent will rise 3.5pc next year).
Agents, Knight Frank’s Matt Barker, Blake Goddard and Christian Sandstrom, marketed the property’s significant development upside after that; it is surrounded by taller buildings including a 15 level office at #100 in the street (story continues below).
“The well exposed property occupies a prominent corner position with city views in Brisbane’s dominant near-city market, with 30.4 metres to Gotha St and 27.2m to Agnes St,” they said.
Local and interstate developers showed an interest, they added.
“123 Gotha Street offered an opportunity to secure an established asset with future repositioning and development potential in Brisbane’s fastest growing near-city office market, and as such it was highly sought after,” Mr Barker said.
“The current secure cash flow and quality covenant appealed to investors, but there is a significant value-add opportunity through the execution of a re-leasing initiative which appeals to the growing Fortitude Valley occupier market,” he added.
“The influx of occupiers to the established location also provides future potential to split floorplates to house multiple tenancies that would be well serviced by the location’s connectivity to an abundance of transport and amenities,” according to the executive.
“The natural sprawl of the Brisbane CBD has seen multiple properties in the Fortitude Valley zoned ‘Principal Centre’ to provide for the largest and most diverse mix of uses and activities that forms the core of an urban settlement, providing future development potential for the property”.
Mr Goddard said significant retail, office and residential product is mooted for the inner north east suburb.
“Defined by world class shopping, fine dining, striking architecture and abundant transport infrastructure, Fortitude Valley has undergone one of the most significant urban rejuvenation processes in Queensland,” he added.
“Positioned in close proximity to Fortitude Valley’s major road thoroughfares, 123 Gotha St is at the epicentre of the suburb’s activity [with] cafes, bars, nightclubs, homewares, fashion and entertainment facilities,” according to the agent.
“It is also set to benefit from key city-shaping projects underway or planned in Brisbane including the Valley Heart Precinct, Fortitude Valley Metro, Cross River Rail, Brisbane Metro, Brisbane Live, Waterfront Brisbane, Queens Wharf and the upcoming 2032 Brisbane Olympics”.
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