Weekly Transaction Update – 9th November 2018

9 November 2018

This week we recorded 22 major transactions worth $790M Charter Hall’s $275M Brisbane spend Charter Hals’ Direct office Fund has secured the purchase of QIC’s 61 Mary Street Brisbane for $275M. The 5 Star NABERS Energy rated building features 28,749 square metres of net lettable area across 17 levels, in addition to a two-floor basement comprising 253 car bays. Over the past several years 61 Mary Street has undergone a $44 million refurbishment, and features one of the biggest floor plates available in the Brisbane CBD, between 1,525 and 2,030 square metres across a substantial 3,646 square metre site. Fully occupied by the QLD State Government under a lease until 2029, the asset provides a 10.5 year weighted average lease expiry (WALE) and a passing yield of 5.6%. Charter Hall have invested over $520M this year in Brisbane with the acquisitions of 217 George St, 40 Tank St, 85 George St and now 61 Mary St. Proprium Capital double money in St Leonards deal Proprium Capital Partners Australia – the merged entity of Goldman Sachs backed Anton Capital has achieved an excellent result on 72 Christie Street in less than 12 months. The group appear to have sold the asset to UOL Group for $154M. Proprium acquired the modern A-grade office building consisting of 11,107 square metres over eight levels and a site area of 2815sqm in February 2017 for $76M, representing a passing yield of 8.5% and a net rent of $573/sqm. The existing single tenant was due to vacate in July 2017, establishing a leasing play in a competitive suburban lower north shore office market. By November 2017, Proprium had secured Mastercard and single replacement tenant for the building on a new 10 year lease at a net rental of circa $595/sqm plus car parking and an undisclosed leasing incentive. Proprium now look to be selling the asset for $154M to UOL Group, reflecting a passing yield of 5.0% and an uplift of $78M (before incentive adjustments). The site is zoned B3 Commercial and currently has an FSR of 4.5:1 which delivers little more than the current structure. Adjoining developments have achieved in excess of 14:1. Charter Hall take on more long term industrial assets Charter Hall has acquired two industrial facilities leased to the Australian Federal Police and Australian Border Force in a deal worth about $120M. The deals were conducted on an approximate passing yield of 5.5%. The first facility is in McPherson Street, Banksmeadow, and has a building area of almost 3000 square metres on almost 23,000sq m of land. The asset has a WALE of 14.3yrs and a net income of $2,653,049 pa. We estimate the transaction to be valued at $48M. The larger transaction at circa $71M was for the land at 180 Loemans Rd, Bulla. The 38 hectare site contains a 7,932sqm facility with a 25 year WALE and a net passing income of $3,946,677 pa. The balance of the site is in a Green Wedge zone and is unlikely to be developed for some time. The facilities were developed by Quanstruct on behalf of the Federal Government. Charter Hall Retail REIT Sells 2 Centres Charter Hall Retail REIT has sold 2 regional assets from their portfolio for $76.1M at a slight discount to book value (-$1m). The REIT bought Coomera Square for $59.2 million in July 2014 and this week sold it to a syndicator for approx $58.9M, representing a 6% yield. The Centre is a 9,115sqm neighbourhood centre anchored by a Woolworths Supermarket. The second asset was a stand alone Woolworths and Petrol Plus in Young, NSW. The Centre was acquired by Melbourne-based investor, Gerry Angelatos of Dome Property Development Group for approximately $17.1M, reflecting a 6.8% yi eld. Review our other transaction data at ReSourceData. * indicates unconfirmed price or apportionment of a portfolio sale #ReDataSource