AEPim unit buys Brisbane CBD office tower

The 27-storey freehold building, which was sold for A$159m, is almost entirely leased to the Queensland government. 

FEB 4, 2016 5:50 AM

Singapore

A PRIVATE property fund managed by Singapore-based AEP Investment Management (AEPim) has picked up a 27-storey freehold office tower in the Brisbane CBD for A$159 million (S$160.7 million).

The price for 41 George Street works out to A$5,307 per square metre or A$493 per square foot based on a net lettable area of 29,960 sq m (322,486 sq ft). The yield works out to about 8.5 per cent.

The property was sold by Queensland Investment Corporation.

It has been acquired by Basil Property Trust, set up by AEPim and for which it is also the trustee manager. The building is almost entirely leased to the Queensland government, with a remaining lease term of more than five years.

There is a small retail tenancy on the ground floor. The transaction was completed on Tuesday.

This is the second acquisition by Basil Property Trust, following its maiden purchase of StarHub Green along Ubi Avenue 1 in Singapore for S$262 million last year from Blackstone. Occupancy in the building has risen to 94 per cent from 86 per cent when Basil completed the property’s purchase in June last year.

AEPim said its interest in 41 George Street comes from the highly defensive cashflow resulting from the lease length and tenant.

Jonathan Edmunds, vice-president at AEPim, said: “In addition, the Australian government recently announced the award for a new A$3 billion project to an international consortium comprising significant groups from Australia and Hong Kong to create a CBD integrated resort (that will include a casino) that sits adjacent to the property.”

Moreover, 41 George Street is about 100 metres from 1 William Street, a 75,000 sq m Grade A building that will be the first new commercial office building developed for the government in Brisbane’s CBD since 2004. “With the significant rejuvenation of the entire precinct, 41 George Street should be able to benefit from additional infrastructure and AEPim is hoping to complement this with improved amenities for the property.”

AEPim is expected to spruce up 41 George Street and increase the amenities on the ground floor.

Basil Property Trust has to date raised US$150 million of equity. In addition, discussions are ongoing with new investors to pump in US$100 million, which would take the fund’s total equity to US$250 million.

The fund life ends in April 2020, with options for two extensions of a year each.

The fund is targeting an internal rate of return of 12-15 per cent per year.

Set up in 2008, AEPim is a Singapore-based real estate investment management company set up by former property consultant Yusof Wahid. Mr Yusof was formerly a shareholder and executive director in DTZ Singapore; before that, he was with the former Jones Lang Wootton. He controls 25 per cent of AEPim, with a family office from Riyadh, Saudi Arabia, owning the rest.