FORTITUDE VALLEY HIGH RISE SELLS FOR $124 MILLION

THE recent sale of 825 Ann Street to Hines Global REIT for $124.6 million is only the fifth time a property transaction in Fortitude Valley has topped the $100 million dollar mark.

The deal with the global real estate investment trust was negotiated by Jones Lang LaSalle’s Geoff McIntyre and Seb Turnbull on behalf of owner Laing O’Rourke.

McIntyre, Queensland managing director, says the sale is the largest near-city transaction in FY13.

The sale reflects a core capitalisation rate of 8.02 per cent, as well as an internal rate of return of 9.37 per cent and $6,583 per square metre.

The sale was negotiated midway through construction via a turnkey purchase agreement.

“Importantly, 825 Ann Street is the fifth $100 million plus transaction to occur in Fortitude Valley, further cementing the precinct as a core investment market and Brisbane's premier near city office market,” says McIntyre.

The A-grade commercial building is 99 per cent leased to three office tenants: Ergon Energy; Laing O’Rourke Construction; and Macquarie Bank. Retail tenant 4evermen has space on the ground floor.

Designed by Rice Daubney, the new 11-story, 206-507-square-foot Class A office building features ground-floor retail and two levels of underground parking.

The property, completed in March, incorporates sustainable design and is expected to receive a 5-star Greenstar rating and a 5-star NABERS energy rating.

“The entire McLachlan & Ann (M&A) development consists of an 11 level office tower with ground floor retail (being 825 Ann Street), a retail strip fronting the corner of McLachlan and James Streets, and a residential apartment development consisting of over 200 apartments,” says Turnbull.

“The completion of 825 Ann Street will see Fortitude Valley reach a total size of 460,000sqm (37% of the total near city market*) and is now a market of critical mass.”

The property’s Fortitude Valley location, its young age and strong tenant base attracted Hines Global to the sale.

David Warneford, director of Hines in Sydney, says Fortitude Valley is the most established submarket outside of Brisbane’s CBD.

“Tenants will enjoy the building’s spacious floor plans with unobstructed views, proximity to a strong amenity base and a variety of nearby public transit options,” he says.

In Australia, Hines Global REIT also owns 144 Montague in Brisbane, 100 Brookes Street in Fortitude Valley and 465 Victoria in Sydney.

Hines Global REIT is a public, non-listed real estate investment trust sponsored by Hines that owns interests in 31 real estate investments located in the United States and internationally.