Cromwell fund offloads Brisbane block for $41.5m
IES College’s home at 433 Boundary Street, Spring Hill
The unlisted Cromwell Direct Property Fund has sold a Brisbane near-city office building off-market to a local investment group for $41.5m as activity picks up in the Queensland capital’s fringe market.
There have been a series of office trades in the city this year: including Clarence Property’s $119m deal to buy 120 Edward Street in the heart of the central business district; Charter Hall offloading several office sites; and some offshore investors exiting.
Some have been at discounts, but Cromwell said the price for 433 Boundary Street in Spring Hill was a 3.8 per cent premium to its most recent external valuation of $40m at the end of December.
JLL’s Elliott O’Shea and Seb Turnbull handled the deal, which reflects a passing yield of about 8.09 per cent, and shows the demand for offices in Brisbane, particularly for assets that have short to medium-term value-add opportunities.
The asset comprises a three-level office building that is fully leased to secondary education provider IES College, with about five years remaining on the lease. It sits on a prominent 3776sq m land holding 1km from the CBD. The 6196sq m building has two levels of basement parking for 115 cars.
“Elevated construction costs, partnered with the current cost of capital, are making new office development of any scale challenging,” Mr O’Shea said.
“This, coupled with a buoyant leasing market, has led to double-digit rental growth.”
The building last traded in 2017, when it was sold by Alceon Group to Cromwell for $42m.
