Financial services giant Challenger Life is in advanced discussions to buy the Industry Superannuation Property Trust’s Green Square office building in Brisbane for more than $200 million.
Challenger has a mandate from a Korean pension fund to buy the building known as Green Square South Tower, located at 505 St Pauls Terrace in Brisbane’s Fortitude Valley.
At this stage the pricing looks strong for a fringe-based asset and could achieve a yield of close to 6 per cent, which would set a new benchmark for commercial property in Brisbane, reflecting the demand from offshore for Australian office assets.
Challenger declined to comment on its interest in the 18,000 square metre building.
placed the property on the market in May appointing Colliers International national directors for capital markets Tom Barr and Don Mackenzie, with John Marasco, to sell the tower. It is leased to the Brisbane City Council until 2027 and was expected to attract competitive bidding following a number of strong deals in the city over the last year.
At the time ISPT’s head of capital transactions, Tony McCormack, said the asset was being sold
to recycle capital. Competitive player
ISPT bought into the development in 2005 and funded the construction of the building as part of a four-property deal with what was then Leighton Properties. At the time ISPT was underweight Brisbane, with only one asset at 100 Creek Street, and was locked out of the market due to lack of suitable stock being traded.
Challenger has been a competitive player in the Brisbane office market alongside domestic buyers such as
Dexus Property Group which purchased Waterfront Place. Challenger has competed with Asia-based funds such as Singapore-listed ARA Asset Management which purchased Kevin Seymour’s HSBC building and AEP Investment Management which purchased Mineral House from QIC Global Real Estate for $159 million or almost double what QIC paid for it less than three years earlier.
Challenger’s acquisitions in Brisbane in the past few years have included 215 Adelaide Street which it purchased from Pramerica
for $224 million, reflecting a 67 per cent increase in value over the last three years. That deal showed a yield of 6.9 per cent.
Challenger also purchased SilverNeedle’s 4.5-star
NEXT Hotel and retail complex on Brisbane’s Queen Street Mall for $133 million last year.
It also purchased a $200 million
Brisbane office tower on the corner of Albert and Margaret streets from private landlord Hatham Holdings.