Sentinel spends $132m on Fortitude Valley office tower near Olympics sites

The Warren Ebert-led Sentinel Property Group has bought the Green Square South office in Brisbane’s Fortitude Valley which is close to key Brisbane 2032 Olympic and Paralympic Games sites.

Sentinel has bought Green Square South at 505 St Pauls Tce, Fortitrude Valley.

Sentinel Property Group has bought the Green Square South office in Brisbane’s Fortitude Valley as it anticipates the area will take off in coming years, as it is close to key Brisbane 2032 Olympic and Paralympic Games sites.

The company has forked out $132.01m for the five-level block that houses Brisbane City Council, with the bargain deal showing the big drop in the city’s office values since the coronavirus ­pandemic.

Sentinel picked up the complex from AXA Investment Managers, which had bought the tower in 2019 from South Korea’s Teachers Pension Fund for about $205.5m. The latest deal partly reflects the building’s lease to Brisbane City Council, which runs until 2027.

If council shifts from the block at 505 St Pauls Terrace Sentinel will have to find a new tenant, although Brisbane’s fringe office market has been more active as tenants seek space. The A-Grade office building is on a 6426sq m site and has 17,618sq m of lettable space and 355 basement car parks.

Sentinel chief executive Warren Ebert.

The purchase price, which showed a 13.54 per cent yield, tops the $103m office acquisition in 2019 by Sentinel of Makerston House in the Brisbane CBD. The group now manages more than 60 investment-grade assets valued at circa $2.4bn.

Colliers agents Adam Woodward, Sam Arkell and James Mitchell brokered the deal. Mr Woodward said the transaction represented the first office sale exceeding $100m outside Brisbane CBD since 2022, in a clear signal that counter-cyclical capital is returning.

Sentinel chief executive Warren Ebert said Green Square South was secured after a $86.1m capital raising and would be the first property in the Sentinel Games Precinct Trust, the company’s highest-yielding active trust open to investment at 8.5 per cent net per annum.

“Sentinel is excited to acquire this office asset, which is a welcome addition to our recent purchases of tenanted office buildings,” Mr Ebert said.

“These include 60 Edward Street in the Brisbane CBD’s Midtown precinct and the Doris Blackburn Building at Forrest in Canberra, which were both acquired for $72m and both well below replacement cost.”

He called Green Square South an opportunistic acquisition, with a $73m discount to previous book value.

“The building is fully leased to Brisbane City Council and provides substantial holding income above forecast distributions to support the repositioning of the asset,” he said.

He said Green Square South was in a prime Olympic location with one of the largest floor plates in the fringe market at 4600sq m, enabling floors to be split.

“Brisbane’s population growth is forecast to grow by one million by 2032, requiring 473,000sq m of new office space,” Mr Ebert said.

“There are A-Grade office supply constraints in the fringe with strong rental growth and record-low vacancy below its historic average to 9.5 per cent. Overall vacancy in Fortitude Valley is forecast to hit 4 per cent by 2028, which will drive strong rental growth. Green Square South will be in a unique position to capture this with limited competition.”

The 2032 Olympics will deliver a $184bn infrastructure boom, Mr Ebert said.

Originally published as Sentinel spends $132m on Fortitude Valley office tower near Olympics sites