Stadia secures ex-union HQ on high yield
Stadia Capital has swooped on a B-grade office – until seven years ago owned by the Australian Workers Union – in Brisbane’s Golden Triangle.
In a deal which may have set a record high yield for a city office this property cycle – in a year which could be the trough – the Sydney based fund manager has picked up 333 Adelaide Street for $41.75 million – a nine per cent net passing return.
The asset has still experienced a value uplift – the AWU sold it to Melbourne developer Icon Constructions for $16.6m in 2016; a price at the time described as a bargain.
Icon purchased the tower after a deal to another Melbourne group, Forza Capital, fell through.
Cushman & Wakefield’s Mike Walsh and Peter Court were the agents.
Costello Group’s Peter Costello and Bill Costello acted for Stadia, which is representing a group of private investors.
How high can yields go?
Stadia is the latest fund manager to secure an investment grade CBD office on a high yield.
Earlier this week we reported Forza bought Sydney’s 171 Clarence St from Investa Property Group for a price reflecting an 8.04pc return.
Dexus also accepted discounts to book values for offices in that city, at 1 Margaret St, to Quintessential, which is also Melbourne-based, and 44 Market St, to Hong Kong’s Pacific Alliance Group.
Also recently in the New South Wales capital, the Bank of China divested 39-41 York Street for $52.5m – a major reduction on the c$80m-plus it was seeking when the asset was listed late last year (story continues below).
That buyer, Invictus Developments, backed by Indonesia’s Karim family, is intending to repurpose the 15 storey building as a hotel.
333 Adelaide Street
On 911 square metres, 333 Adelaide Street contains 7499 sqm of B-grade – about 15pc of which is vacant.
Tenants include the Australian Moreton Education, which anchors, on a 12 year lease, and Sydney Business Travel Academy.
The AWU – which sold the building with a three year leaseback in 2016 – still occupies too.
Half the tenants have been there over 15 years and the weighted average lease expiry is 4.42 years, Mr Wals said.
The building also recently underwent an $8.35m upgrade.
“When you combine this with a 9pc initial yield and a below replacement cost argument at $5,567 per sqm gross when the average B-grade office deal in the preceding 18 months were trading at $8000-$10,000 per sqm, it makes for a compelling investment that has forward priced risk at an attractive level,” Mr Walsh added.
Stadia was established four years ago by Jason Kougellis and Scott Staniforth.
Subscribe to our newsletter at the bottom of this page.
