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An A-grade riverfront office building at Milton in Brisbane’s inner-west has sold for $80 million to Acure Asset Management in a counter-cyclical deal by the Perth-based funds manager.
The property, located at 339 Coronation Drive, has been sold with 93 per cent occupancy and a net passing income of $7.47 million – which pitches the deal at a yield of 9.3 per cent.
Acure’s Brisbane Office Trust has acquired the five-level office building from a private fund managed by Singapore-headquartered asset manager Keppel, which acquired the property for $40.25 million in an off-market deal in 2018.
Acure Asset Management’s managing director Angelo Del Borrello describes the acquisition as a countercyclical investment opportunity in a constrained market.
“In our view, the property represents a compelling investment opportunity in terms of both value and returns, with an attractive purchase price and strong fundamentals driving future returns in the lead up to the Brisbane 2032 Olympic Games,” he says.
“Brisbane has been the beneficiary of significant net migration and is seeing the benefit of a strong local economy with favourable dynamics of constrained supply and a positive outlook.”
Acure is targeting a 14 per cent internal rate of return for the asset which Del Borrello says benefits from a distinctive design that offers expansive views and “unrivalled access and exposure”.
“It has high occupancy and is located in one of the country’s best-performing office markets, experiencing a strong economic outlook and coupled with constraints on new supply,” he says.
The Milton office building has 12,980sqm of net lettable area with 315 car bays and is located on a 5,843sqm site fronting the Brisbane River.
The property was upgraded 2021 after Keppel bought the then vacant complex, repositioning it and undertaking a leasing campaign to attract tenants such as CPB Contractors, Holcim Australia, Atworkspaces and Toyota Finance.
Improvements include a new façade, a green central atrium, an atrium café, lift lobbies, end-of-trip facilities, carpark entrance, signage opportunities and tenant fitouts.
The property was sold through an expressions-of-interest campaign managed by Knight Frank agents Justin Bond and Matt Barker, in conjunction with JLL’s Seb Turnbull, Paul Noonan and Elliott O’Shea.
Barker says the property drew significant buyer interest from syndicators, privates, developers and institutions.
“The commercial property market has begun the recovery, with asset values having returned to growth, but there is more growth to come, presenting the buyer with an opportunity to benefit from future value uplift,” he says.
“Brisbane is one of the cities expected to see the biggest uplift, as it is benefitting from strong population growth, infrastructure projects and of course the 2032 Olympics.
“The scale and opportunity of this site at 339 Coronation Drive provides long-term land value preservation and potential development opportunities.”
Noonan says the property’s Coronation Drive location places it in a prime inbound position in one of Brisbane’s most established near-city commercial precincts.
“The asset also has secure income from a diverse range of tenants, including ASX-listed business, national and international corporations and private companies, who are drawn to the asset’s location, with expansive views and unrivalled access and exposure, as well as its large car park,” he says.
Noonan notes that the high occupancy provides Acure with strong initial cash flow and an opportunity to enhance returns through a tailored leasing strategy.
Acure Asset Management has total assets of about $500 million across 14 property syndicate funds nationally.
The funds manager last year scooped up the Quest Dubbo hotel for $17 million.
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