Charter Hall, Investa partner on $372m Brisbane deal

The two Sydney-listed investment managers have acquired three office properties and a development site within Brisbane’s ‘Golden Triangle’.

Sydney-based real estate investment managers Charter Hall Group and Investa have jointly invested in office assets and a development project in Brisbane’s financial district for A$53.75 million ($40 million; €35.5 million).

In a 50:50 joint venture the pair have acquired 366, 370 and 380 Queen Street in Brisbane’s so-called ‘Golden Triangle’ which comprise a total site area of 23,110 square feet, and with existing buildings a net lettable area of around 102,000 square feet.

The amalgamated properties offer an opportunity to secure a major development site, subject to Council approval, which the firms said has a forecast on completion value of more than A$500 million.

Subject to Council approval, the proposed development would comprise basement car parking, a podium level with gym and childcare, end of trip facilities and retail and office accommodation over 40 levels.

Capital for the transaction has come from the pair’s core funds, the A$4.1 billion open-ended Investa Commercial Property Fund and the A$3 billion open-ended Charter Hall Prime Office Fund.

“With a limited number of suitable development sites and a forecast improving office market in Brisbane’s CBD financial district, amalgamating these sites for future development will provide superior returns to alternative stabilized asset acquisitions in the market,” commented Charter Hall Group executive – Office, Adrian Taylor.

“The spread between asset classes and markets presents a cyclical opportunity to capitalize on appropriate value-add and development opportunities and this site provides the perfect opportunity at the right time in the cycle,” added Peter Menegazzo, Investa’s chief investment officer.

Brisbane’s CBD office market conditions remain challenging, but market indicators suggest that the worst of the recent downturn has past.

CBRE’s managing director – Brisbane, Flint Davidson, said the city is moving “into the recovery and growth phase of the leasing market” and his colleague Mark Curtin, CBRE regional director, major projects said: “Increased tenant demand and a significantly more conservative development pipeline over the next 2-3 years should see the prime vacancy rate in Brisbane reach 5 percent by 2020.”

CBRE’s Davidson and Curtain, as well as National Director Hotels, Wayne Burnz advised on the transaction.