The $97 billion Future Fund and local giant Stockland are expected to bring Brisbane’s $600 million Waterfront Place office tower to market later this year in one of the largest single office property offers since the global financial crisis.
The move would put a focus on Brisbane’s office markets not seen since Queensland Investment Corporation sold the three Central Plaza towers for a combined price of $839.2m in 2007.
It will likely test the appetite of global investors for stock outside Sydney and Melbourne, particularly as some local players are wary about the state of Brisbane’s office leasing market.
Capital values in the city appear to be holding up, with US group Pembroke Real Estate circling the CP3 office tower, which has been offered for sale through CBRE and McVay Real Estate, by a Lend Lease fund and the Abu Dhabi Investment Authority, for $123m. The parties declined to comment last night.
The Future Fund paid $217m for a half-stake in the Waterfront Place tower, at 1 Eagle Street, from a Stockland-managed trust in 2010, and a further $16m for the adjacent Eagle Street Pier.
It is understood that there will be a review around August where the co-owners will decide on the tower’s future, with the listed group intent upon a disposal and the sovereign fund expected to also offload its stake to maximise the overall value.
For Stockland, the offer would be part of a shift to lessen its overall exposure to office property, rather than any tie with a potential takeover play for Australand Property Group. Waterfront Place was built in 1989 and is one of Brisbane’s landmark office towers, with law firm King & Wood Mallesons and real estate giant CBRE calling it home.
The Future Fund and Stockland declined to comment.
The Future Fund has an expansive Australian property portfolio and is thought to be willing to trade assets where capitalisation rates have compressed. The fund has also traded holdings overseas — it sold a one-third stake in Britain’s Bullring Shopping Centre last year in a £307m deal.
The Australian revealed last month that the Future Fund was set to increase its property exposure to the US, teaming up with a Dallas-based group for a $1bn industrial play.
Office vacancy rates in Brisbane reached 14.2 per cent at the end of January, according to the Property Council of Australia.
Few other properties are available, with the state government-leased State Law Building, at 50 Anne Street, on the market through CBRE with a price tag of about $140m.
Lend Lease’s Core Plus Fund’s Brisbane properties, including the $75m Valley Metro & Transport House in Fortitude Valley, will also be available through JLL and Colliers.