Deutsche Asset Management expands empire with $140m tower in Brisbane CBD

Deutsche Asset Management is aiming to expand its $760m Australian property empire after buying a major Brisbane tower.

International funds house Deutsche Asset & Wealth Management is seeking to expand its $760 million Australian property empire after last week buying a major Brisbane tower.

The group, which bought the A-grade commercial tower at 120 Edward Street in the city’s central business district from Axis Capital for $142.65m is confident about the city’s recovery.

The German investor’s local holdings also include Brisbane’s former FA Pidgeon & Son tower at 313 Adelaide Street.

Deutsche Asset Management head of transactions, Australia, James Bartlett, says the city is well positioned.

“Brisbane CBD office market cap rates are attractive versus other investment-grade markets, and versus the ten-year Australian government bond yield,” he said.

The market was showing “attractive occupancy market fundamentals”, he added, saying it would “continue to benefit from improving demand, limited supply, declining vacancy and increasing effective rents”.

The deal lifted Deutsche Asset Management’s portfolio to $660m, with $519m in office and industrial comprising $141m.

The firm’s current investment mandates for Australia focus on acquiring substantially stabilised, income-producing assets and enhancing their performance through active asset management.

Mr Bartlett said this approach did not traditionally include major redevelopments but did stretch to refurbishments and the repositioning of assets where this created long-term value. Such projects may be pursued as Deutsche Asset Management sees Australia as a “key strategic market” in Asia, with one of the largest and fastest-growing pension fund markets.

Other offshore groups are also investing in Brisbane. AFIAA is selling the HQ South tower in Brisbane’s Fortitude Valley to M&G Real Estate for more than $120m in a deal being brokered by Knight Frank and Savills.

Deutsche AM has also acquired three cold storage assets over the past year, breaking into one of the hottest segments of the industrial property market. It has intentions to also grow this portfolio to gain scale for tenants.

“Our investment strategy for cold storage logistics focuses on the reliable and predictable, reoccurring income streams these long-leased, defensive assets generate in the cycle,” Mr Bartlett.