Forza Capital have sold 420 George Street Brisbane to the Dymocks family in a $42.1m transaction providing investors with a +18% pa return.
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.
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.
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.
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.
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.
Forza claimed to have provided investors with an 80% total return over the life of the investment or around 18%pa.
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.
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