Australian-listed Centuria Capital has agreed to buy a Brisbane office building from US-based property group Hines for A$89m (US$59.9m).
Centuria acquired 348 Edward Street in the Brisbane CBD on behalf of an unlisted single-asset fund, which will be launched later this month, the firm said in an announcement.
“This transaction grows our unlisted fund opportunities to $216m in FY20 year to date,” said Centuria joint CEO Jason Huljich.
Domestic and overseas investors have been returning to the Brisbane CBD office market in search of higher yielding assets, according to Savills research.
The newly acquired building is located 60 metres from the central train station and is near the Brisbane Private Hospital, Brisbane Magistrate Court and the regenerated Queen Street Mall precinct.
The asset is 89% occupied, largely to ASX-listed and multinational tenants, and has a 5.1-year weighted average lease expiry (WALE).
Brisbane’s CBD office market is experiencing a turnaround after hitting the bottom of the cycle due to a weak economy and falling mining investments over the past five years, according to Savills.
Brisbane CBD offers a notable spread on the Sydney CBD office market, while Brisbane CBD office rental rates are expected to edge upwards as vacancy rates drop to the lowest recorded level in five years.
The new fund is forecast to deliver an distribution yield of 6.25% in the 2020 financial year, growing to 6.50% in FY21.
The transaction follows a commitment by Centuria’s listed office REIT, CMA, to buy two A-grade offices for A$380m.
Centuria’s listed industrial REIT, CIP, has also recently settled four acquisitions worth about A$80m in total.
“These acquisitions are an integral part of our group strategy to accelerate AUM growth and we expect to continue this momentum by executing on further attractive opportunities across our real estate platform,” Huljich said.
Centuria is a specialist investment manager with A$6.6bn in assets under management.