Ipswich’s Icon office tower to sell for record $145m to fund manager Castle Rock

A nine-storey building in the centre of Ipswich has a new owner after a mad rush to raise millions of dollars in just seven weeks. See what it sold for.

The sale of a prominent feature in the Ipswich CBD skyline filled with public servants has set a new record, with the monster transaction a significant “endorsement” for the rapidly-growing city as interstate investors increasingly eye off local property.

The $74 million Icon tower which opened in 2013 has 17,000 m2 of office space, with about 91 per cent of that rented to the state government.

The state’s 15-year lease to house workers from several departments expires in 2028.

The nine-storey building was constructed at a cost of $74 million.

The sale is expected to settle in October for about $145 million, which is a record for an office building in Queensland outside Brisbane.

Cromwell Funds Management Limited has made the decision to offload the nine-storey tower to Melbourne-based property fund manager Castlerock.

Colliers Queensland Investment Services director Sam Biggins handled the sale of the building on Brisbane Street.

Mr Biggins said the off-market sale came about after the firm dealt with Cromwell during the $25 million sale of the Bendigo Bank building on the same street in December.

He said Ipswich City Council’s redevelopment of the CBD played a significant role in bringing investors back to the heart of the city.

“It’s pretty significant in terms of the ticket size but also in terms of what it means as an endorsement for the growth prospects of the Ipswich region,” he said.

“The majority of (Castlerock’s) investments are government-tenanted assets right around the country. They were attracted to Icon because of the quality of the asset, the scale of the opportunity and the region’s growth prospects.

“In terms of the government’s footprint between Brisbane and Toowoomba it is their headquarters for want of a better term.

The state government fills about 91 per cent of office space in the tower.

“Fundamentally (investors) understand the strong population growth in the region. There’s a local economy which is supported by defence, health care, education, logistics and manufacturing. It’s a pretty diversified economic base. That’s attracting attention.

“A lot of groups are drawing a parallel with somewhere like Parramatta, albeit it on a smaller scale. You can see the growth over the past 20 years of those established satellite cities like Parramatta and Geelong. Parramatta is now the fifth largest CBD in Australia.”

Castlerock raised $90 million to fund the acquisition in just seven weeks through its Auslink Property Trust No. 2.

“This capital raise was the largest in Castlerock’s 18-year history, so it was extremely gratifying to see such keen investment appetite for the fund,” director Adam Bronts said.

“We are very grateful to current and new investors who have supported this capital raising.

“We were confident of raising the $90 million considering a forecast return of 7.2 per cent a year, as well as the strong performance of past acquisitions and developments, but the fact we did so in seven weeks reflects both the appeal of this fund and the high level of demand for quality property assets delivering healthy returns.

The tower opened in 2013 with the state government holding a lease until 2028.

“Castlerock’s strategy has always been to invest in high quality assets and to build strong relationships with stable tenants such as the Queensland State Government.”

A Castlerock spokeswoman said there are no immediate plans to purchase any more local properties.

“At the moment Castlerock is staying with the one property in Ipswich, but are looking to add to our growing portfolio with further opportunities located throughout Australia,” she said.

“Our Auslink Property Trust No. 2 already boasts several established and successful government leased assets, and with the Ipswich property coming with long leases to strong tenants in the Queensland State Government and NDIA it made for an attractive addition to our portfolio.

“Alongside this, the asset is situated in a prime CBD location that is only going to see further success as a result of the current revitalisation efforts and with its NABERS energy rating of 5.5 stars it meets our sustainability benchmarks.”

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