Barwon Investment Partners has quietly sold an under-utilised South Brisbane office for a nine per cent premium on its outlay just over two years ago.
The three level essential services backed asset at 55 Russell Street, on the corner of Edmonstone, diagonally adjacent to Musgrave Park, reaped the fund manager $38.6 million – a low 4.8 per cent yield made even more impressive by the short (1.75 year) weighted average lease expiry.
It paid Forza Capital $34.7m – reflecting a five per cent yield – in October, 2021; then the WALE was four years.
In a show of how fast the value has moved, that seller outlaid $23.65m about 18 months earlier.
It also undertook a refurbishment, seeing it achieve a 6-star NABERS rating, and plugged a 67pc vacancy.
Like Barwon, Forza offered 55 Russell St off-market.
First major deal since planning change
A local land banker bought 55 Russell St following a campaign by JLL’s Elliott O’Shea and Seb Turnbull, who added it is the first significant transaction since local planning changes increased density, allowing the 2153 square metre Principal Centre zoned block to accommodate a c30 level tower, up from 12 (story continues below).
With 4081 sqm of A-grade space and 50 car parks, the property could also be retained as an investment; it is fully leased to three state government departments including Queensland Health.
It is also near the Queensland Children’s Hospital and $800m West Village and Fish Lane entertainment precincts.
“The building was sold as Barwon is currently reviewing many compelling risk-adjusted return opportunities in the market and looking to reinvest capital,” Barwon portfolio manager, Brendan See, said.
“Many of the opportunities we are contemplating better align to Barwon’s healthcare strategy than Russell St and allocating funds to thee opportunities will further refine the portfolio,” he added.
Mr O’Shea added “while capital market conditions remain challenging, this transaction signifies the continued strong demand from private investors for well located properties that boast resilient investment fundamentals”.
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