Sentinel pays $70m for RACQ’s Brisbane HQ as city office market finds bottom
Office blocks are trading again but vendors are selling at discounts as syndicators chase bargains ahead of an expected lift in rents.
Warren Ebert’s Sentinel Property is extending its run of office purchases to Brisbane with the RACQ headquarters on Edward St in the central business district in its sights for more than $70m.
Buying the block is part of its counter-cyclical strategy and would lock in Brisbane’s status as the top location for syndicators as they try to pick up assets at the bottom of the cycle.
Mr Ebert declined to comment on the deal but has been optimistic about the market, noting last year that international fund managers and listed Australian companies are now selling assets.
The manager bought unwanted assets after the global financial crisis and sees another opportunity to buy from larger institutions at a time when building new projects is tough. Other buyers following this path include funds house Quintessential, which picked up a tower from Canadian giant Brookfield for $250m, and Alceon Qld, which bought two office blocks from Charter Hall’s funds.
Brisbane is one of the most active cities for deal making due to the relative strength of its office market and opportunities to convert buildings into other uses. Buyers in this area include Sumner Capital and Innovate RE, which bought the former Boeing headquarters from the Australian Unity Office Fund, where a student accommodation project is now planned.
The building at 60 Edward St is on a prominent 1836sq m site, less than 250m to the new Albert Street Cross River Rail Station. The RACQ invested more than $7.5m into the block when it owned it. JLL’s Paul Noonan and Seb Turnbull are handling the sale but declined to comment.
RACQ bought the building in 2014 for $60m and moved into the complex. It will be kept as an office block and put into a fund launched by Sentinel. The manager is billing the trust as a rental growth opportunity. The RACQ occupies 27 per cent of the space and the federal government at 19 per cent, with rental growth up to 32 per cent over the previous year.
The 10,637sq m block borders the prime Golden Triangle and Queensland government office precinct, with the area set to take off ahead of Brisbane’s 2032 Olympic Games. Large scale projects include the $3.6bn Queen’s Wharf, $6.3bn Cross River Rail, $5bn Hamilton Olympic Village, and $1.4bn Brisbane Metro.
Mr Ebert had flagged that he expects to be active in the office sector due to market price corrections and businesses convincing staff to return to the office.
Sentinel earlier this year boosted its portfolio with the purchase of two office buildings in the Botanicca Corporate Park in the Melbourne CBD fringe suburb of Richmond for $80m – on a yield of 9.31 per cent.
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