Australian asset manager Real Asset Management is betting on the Brisbane CBD market after securing an A-grade office tower for $141.1 million.
RAM acquired the 23-storey office building at 333 Ann Street, comprises a 16,301 sqm of net lettable area, on a passing yield of 7.03%.
The fully leased asset is occupied by the Federal government, one of Australia’s leading superannuation groups, and other tenants on a 4.15-year weighted average lease expiry (WALE).
RAM was attracted to the high-quality Queensland asset as the state has a strong economic outlook and leads the charge in Australia’s economic recovery with nation-leading jobs growth and interstate migration fuelling historically high levels of population growth.
“The asset will become the fifth in the RAM Diversified Property Fund, an unlisted property fund targeting a diversified and defensive property portfolio, which has total commercial real estate assets valued at almost half a billion dollars in four states,” RAM Head of Real Estate Matthew Strotton said.
“This attractive deal is accretive to fund WACR, it increases exposure to the high growth Brisbane market, is in a desirable CBD location and provides access to strong contracted rent growth as well as potential value-add opportunities.
“We are at a point in the cycle where taking a position in pre-existing, well-let assets with long-term contracted income is very attractive.
“But more importantly, RAM, as an active manager, continues to pursue opportunities to further diversify and enhance both income and longer-term growth prospects of the portfolio under management.”
The property is situated less than 150m away from Brisbane’s Central Rail Station and benefits from access to Brisbane’s most important piece of public transport infrastructure.
Centrally situated in the 2032 Olympic Games host city, Ann St is well positioned to benefit from the enormous infrastructure investment and the expected social and economic benefit the games will drive.
The deal comes after real estate investment manager Marquette Properties bought the 189 Grey Street office tower in Brisbane’s Southbank for $104.4 million last month.
In August, Wallum Partners sold two office buildings in the inner-city suburb of Milton for $46.6 million after purchasing the property for $26 million in 2019.
RF Corval sold an A-grade office at 365 Macarthur Avenue property in Hamilton to a Sydney-based private investor for $46.5 million in July, representing a 5.3% capitalisation rate.
Australian office deal volume declined 10% year-on-year to $7.9 billion in the third quarter, according to MSCI Real Assets.
Commercial property transaction activity has slowed amid rising interest rates, surging inflation and an uncertain economic outlook weighing on investors.
