Locals benefit from the oldest trick in the economic book

LOCAL buyers are increasingly taking a larger bite out the Brisbane office investment market as the State Government's foreign tax surcharge weighs on offshore investors' confidence.

Sydney-based Prime Super and adviser Whitehelm Capital have expanded their national office portfolio with the acquisition of an office tower at 313 Adelaide St.

Industry sources say the tower would have sold for almost $160 million.

The deal was struck by CBRE's Tom Phipps, Bruce Baker and Flint Davidson with Matthew Lawrence of CBRE's Debt & Structured Finance team arranging the debt facility for Prime Super and Whitehelm.

According to CoreLogic the tower last changed hands in 2015 for $125.4 million when it was bought by international funds house Deutsche Asset & Wealth Management.

Mr Phipps said the Adelaide St deal highlighted increased onshore investor activity in Brisbane following the Queensland Government's decision to introduce a foreign land tax surcharge.

The office tower at 313 Adelaide St has a new owner.
The office tower at 313 Adelaide St has a new owner.

It is understood that a number of offshore buyers have withdrawn from deals since the land tax surcharge was put in place.

Mr Phipps said overall, investment volumes have remained strong, with domestic investors identifying that Brisbane offers good relative value.

"Assets providing long term, government-backed income with fixed annual rental increases are particularly sought after in the current low growth environment, as highlighted by the 313 Adelaide St transaction," he said.

The A-grade tower has a net lettable area of 14,592sq m and a weighted average lease expiry of 5.8 years, underpinned by anchor tenant the Queensland Government's Department of Transport and Main Roads.

The sale price realised a core capitalisation rate of about 5.75 per cent.

Prime Super is a multi-industry superannuation fund with over 125,000 Australian members and circa $5 billion in funds under management.

Working Whitehelm, the group has been expanding its property portfolio and recently finalised the $76 million purchase of the Citilink Business Centre in Brisbane's Bowen Hills.

Mr Phipps said Prime Super and Whitehelm were attracted by the quality of the building's services, amenities and large car park catering for the specific needs of the State Government tenant.

"The government lease covenant, recent major refurbishment and the fact that the building requires virtually no capital expenditure in the medium term were other key drawcards, as was the building's strong leasing history," he said.

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