Forza Capital have sold 420 George Street Brisbane to the Dymocks family in a $42.1m transaction providing investors with a +18% pa return.
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The B Grade asset sits in the legal district of the Brisbane CBD and features 6,285sqm of NLA over 13 levels. A side lift core and sun light to all four sides positions the building as suitable for smaller sized tenants keen to be near the Court precincts.
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The building is now 87% occupied with a 3.9 year WALE. It was sold with a 2 year rent guarantee over the vacant space with the purchase price equating to a 7.1% yield and a capital value of just under $7000/sqm.
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The sale to Dymocks was negotiated by Cushman & Wakefield. Forza Capital acquired the property for $20m in 2015 as a distressed asset and went on to increase the building's occupancy from 8 per cent to 96 per cent.
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The building had been fully tenanted by the Queensland Department of Transport, however the department had vacated following the former Newman government’s public sector cutbacks.
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Forza's acquisition price equated to $3,182/sqm which was significantly below the replacement cost considering that in the 8 years prior to Forza's acquisition, the previous owners spent over $10.5m on upgrading and refurbishing all services, lifts, amenities, end of trip facilities (showers, toilets, bike racks and lockers), a refurbished ground floor foyer and a refurbished façade. Forza subsequently spent a further $4.5m on tenant incentives and towards improving the building's NABERS rating including swapping to LED carpark lighting and adding a solar PV system which decreased power consumption by $20,000 per annum.
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Forza claimed to have provided investors with an 80% total return over the life of the investment or around 18%pa.
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The sale compares to the recent sale of a larger building in the adjacent block by Challenger at 30 Makerston Street. That property was acquired by Sentinel Property Group for $103m in May 2019 and featured a 14,640sqm building, fully leased with a 4.63 year weighted average lease expiry. It was sold on a passing yield of 7.85% and a capital value of $7,036/sqm.