Canberra office in Australia’s public health hub sold for $84.6m
Growthpoint Properties Australia has bought a government-leased office complex in Australia’s major health policy precinct in Canberra for $84.6 million.
The ASX-listed real estate investment trust has exchanged contracts to buy the A-grade office asset in Phillip, after a joint sales campaign by CBRE and Colliers attracted strong investor interest.
Growthpoint managing director Timothy Collyer said 2-6 Bowes Street had high occupancy and a long weighted average lease expiry, adding the acquisition increased the group’s investment in the ACT office market to $261 million.
“The property is located in the suburb of Phillip, regarded as ‘Australia’s public health hub’, which will benefit from ongoing government investment in infrastructure and transportation links,” Mr Collyer said on Tuesday.
Growthpoint has acquired this A-grade office asset in Phillip, known as Australia’s public health hub. Picture: realcommercial.com.au/for-sale
CBRE director of capital markets for Canberra Nic Purdue said the participation from investors in the campaign was one of the strongest seen in the nation’s capital all year.
“The ideal combination of long WALE, complete asset refurbishment and robust market fundamentals generated wide interest from both domestic and offshore buyers,” Mr Purdue said.
“The sale of 2-6 Bowes Street demonstrates the appeal in Canberra extends beyond Civic [the CBD] and the parliamentary precinct.”
Constructed in 1986 and refurbished in 2017-2018, the building has 12,376sqm of office space.
It is 96% leased with a 9.2 year WALE. The ACT Department of Health is the major tenant, while the federal government occupies 7% of the building.
The property is being acquired on a 5.0% initial income yield, Growthpoint said.
Michael Andrews, CBRE state director (NSW) for capital markets – office, said the sale highlighted the global appeal of long WALE assets in defensive markets like Canberra.
“The ongoing story of Canberra’s outperformance driven by a stable occupier market, significant reduction in the overall vacancy rate and exposure to the government sector continues to resonate with investors,” Mr Andrews said.
Agents said the sale of the office complex highlighted the global appeal of long WALE assets in markets like Canberra. Picture: realcommercial.com.au/for-sale
As well as announcing the Phillip acquisition and the group’s upgraded 2021/22 guidance, Mr Collyer said preliminary draft external valuations indicated a $256 million or 7.5% increase in Growthpoint’s asset values.
“This uplift has been driven by leasing success across both our office and industrial portfolios, alongside favourable market conditions,” he said.
“Investor confidence in the office market is improving, as leasing markets appear to have stabilised, driving an increase in sales activity and yield compression for A-grade, well-leased assets.”
The sale of 2-6 Bowes Street is subject to Foreign Investment Review Board approval. Growthpoint said it did not anticipate any issues with obtaining approval.
