Big short-term return on government office investment

October 29, 2021 / Healthcare Property

Forza Capital has flipped a Brisbane office investment it bought two years ago, making a 47 per cent capital gain on the transaction.

Barwon Investment Partners bought the three-level building at 55 Russell Street, South Brisbane, for $34.7 million on a yield of 5 per cent.

Barwon Investment Partners has bought this South Brisbane office building $34.7m. 

It had been fully leased to three Queensland government departments by Forza Capital, which bought it one-third empty in early 2019 for $23.65 million.

At the time, Forza Capital Director Ashley Wain said: “We are constantly looking for mispriced assets. Some investors might have been concerned about the one-third vacancy but we are supremely confident we will have that leased pretty quickly.”

Mr Wain this week said once Forza secured tenants it then focused on improvements “which saw the building achieve a six-star NABERS rating, the first existing asset in Brisbane to do so”.

“We are very happy with the investment performance on this transaction,” he said. “We were intending to hold the asset longer term but when the off-market offer was presented, it made sense to divest.”

The sale was managed by Cushman & Wakefield agents Frederic Le Fanue, Mike Walsh and Peter Court, who also brokered the 2019 sale to Forza Capital.

It was sold with an average weighted lease expiry of almost four years on a rate of $8500 per square metre based on net lettable area.

Tenants include Children’s Health and the Queensland Aboriginal and Islander Health Council.

“Investors continue to seek well-located assets with exceptional lease covenants and track record, which is driving strong demand for buildings leased to health and government tenants,” said Mr Le Fanue from Cushman & Wakefield.

Barwon Investment Partners portfolio manager Brendan See said healthcare assets are a focus for the business.

“We are well capitalised and looking to deploy funds into all types of real estate throughout the healthcare continuum from hospitals and medical centres through to disability services and medical offices,” Mr See said.

Read the full AFR article here

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