AFP building in Cairns sold following strong buyer interest28 October 2022
A facility purpose-designed and built for the Australian Federal Police (AFP) in Cairns has sold for $17 million.
The two-level property at 420-422 Sheridan Street in Cairns North, around 15 minutes from the Cairns CBD, adjoins the Cairns local and international airport, providing the AFP with ease of access to critical transport infrastructure.
It consists of a 2,155sq m building on a 5,489sq m site, with around 80 car parks. It was constructed to accommodate a 5-Star NABERS rating.
The property, which was built in 2014, is leased to the Australian Federal Police on a 15-year lease, with two five-year options leading up to an expiry of 2039.
It was purchased by a New South Wales-based investor from a Victorian investor following a competitive Expressions of Interest campaign run by Christian Sandstrom and Greg Wood of Knight Frank Queensland in conjunction with Danny Betros of CBRE Cairns.
The sale price of $17 million reflected a yield of 6.5 per cent, based on the passing net rental.
Mr Sandstrom said the campaign resulted in good interest from a wide range of private investors and syndicators, generating more than 80 enquiries in total.
“At the close of the campaign seven offers were received and terms were agreed with a private investor from New South Wales on a cash unconditional basis,” he said
“This investor already owns a portfolio of government-leased assets and was attracted by the calibre of the Commonwealth tenant, high quality of the building and the fact that the property was purpose- designed and built for the AFP’s specific accommodation needs.
“In addition the property had a seven-year WALE and remaining options for 10 years.
“The Melbourne-based owners were extremely pleased with the result especially given the two per cent increase in the official interest rate since they decided to divest the asset, which had been in their family since 2014.”
Mr Sandstrom said the Cairns market was performing strongly, supported by tourists from within Australia during COVID and now overseas visitors beginning to return to Far North Queensland and strengthening local businesses.
“As well, investors are looking to diversify their asset portfolios and regional markets like Cairns and Townsville are becoming targets given the quality of the investment opportunities and significant infrastructure being spent in these regions.”
Mr Betros said buyers were also drawn to the future potential of the Cairns property, with the large site offering options for expansion down the track.
“Potentially there could be a building added at the back for offices or other required facilities,” he said.
“The site is of strategic importance for the AFP as it is in close proximity to the airport and the port activity in Cairns area.
“It is easily one of the most impressively deigned and fitted-out office complexes in Cairns, complete with 81 car parks, and it will suit the AFP’s operations for many years to come.
“Investor activity in the Cairns market continues to surge with Australia-wide interest being received on all sales campaigns at present.
“Investors are looking for better opportunities in high growth, strong regional markets like Cairns that are being well supported by continuing Government spending and investment in essential infrastructure.”