Cromwell pays over a half a billion for Brisbane tower

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SPURRED by Brisbane’s improving office vacancy rates, Cromwell Property Group has acquired the 35-level CBD tower at 400 George St for $524.75 million.

The ASX-listed property manager and investor has just successfully completed a $407.5 million raising to help fund over $1 billion of identified acquisition opportunities across Australia and Europe.

It also recently made two major plays on either of the Sydney CBD, purchasing the Altitude Corporate Centre in Mascot and then offloading a half share in the Northpoint Tower for $300 million to co-owner Francis Choi.

The 400 George St building was constructed in 2009 and has a total net lettable area of 43,978 sqm spread across office, retail and childcare components. The building is 99.8% occupied with a 4.9-year weighted average lease expiry, underpinned by blue-chip corporate and state and commonwealth government tenants.

The retail precinct, 400Food, includes fast food, café and fine dining across the ground floor and podium levels. Parking for 223 vehicles is available across four basement levels, and end-of- trip facilities.

Sustainability credentials include a 5.5 Star NABERS Energy, 4.0 Star NABERS Water and 5.0 Star NABERS Indoor Environment Ratings as well as a 5.0 Star Green Star As-Built Rating.

“The acquisition, in the prestigious North Quarter precinct, comes as Brisbane’s commercial property market continues to improve with vacancy declining to 11.9%,” Cromwell’s chief executive officer, Paul Weightman said. Brisbane’s CBD vacancy rate fell for the third consecutive six-month period in the first half of 2019, from 12.9%.

“We continue to look to recycle capital from assets where we have already added significant value, as we have done with Northpoint Tower in North Sydney, to ones where we see new opportunities such as 400 George St.

“The proceeds of these activities, alongside the sell down of existing funds, will be used to continue to fund opportunities identified as part of Cromwell’s invest to manage strategy as well as accretive value-add development opportunities in the existing Australian balance sheet portfolio.”

Cromwell’s chase for 400 George St had contributed to tensions around perceived conflicts of interest that prompted its largest shareholder, David Blight, to step down from the company’s board last month.

Blight is also CEO of the local arm of Singaporean group ARA Asset Management, and had been frozen out of Cromwell’s recent raising after lawyers considered ARA a related party. They group has also competed for the same real estate assets; as well as 400 George Street they were both after 133 Mary St, which ARA acquired for $96.5 million in April.

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