DEXUS has continued its office tower divestment program as it focuses on its development pipeline, selling 10 Eagle Street in the heart of the Brisbane CBD’s Golden Triangle alongside Canadian co-owners CPP Investment Board for $285 million.
Brisbane-based Marquette Properties has acquired the stake in the 34-level, 27,800 sqm A grade tower, which is 92% occupied by tenants including AEMO, Wilson Parking and Accenture, while Dexus recently extended and expanded a commitment with AVID Property Group as part of a suite of Brisbane CBD leasing deals.
The tower had a 2.9-year weighted average lease expiry as at 31 December, and now has a slightly higher occupancy than when it was offered to the market late last year.
Perched on a 3,477 sqm island site, the tower was Brisbane’s tallest on completion in 1978 and features typical floor plates of 950 sqm, 247 car bays, and a 5-Star NABERS Energy Rating.
The asset is owned by Dexus and CCPIB’s Dexus Office Partnership. It had acquired the property in 2014 from the Commonwealth Property Office Fund.
Dexus said its net sale proceeds being used to repay debt, with gearing to fall from 24.9% to 20.7%.
“This transaction continues our asset recycling strategy, realising value for both Dexus and our Dexus Office Partner while reducing our exposure to the Brisbane market,” Dexus chief investment officer, Ross Du Vernet said.
“It also provides us with an excellent opportunity to focus our leasing, asset management and development capabilities on advancing our city-shaping development project at Waterfront Brisbane,” Du Vernet said.
Approval from Brisbane City Council was received at the end of last year for the $2.1 billion Waterfront Brisbane development. The project will see the 30-year old Eagle Street Pier building make way for two towers of 49 and 43 floors across a total of 120,000 sqm of office space, as well as riverfront dining, retail outlets and public plazas with a widened and upgraded Riverwalk for pedestrians and cyclists.
The positioning of the towers will enable views from the city to the river that have been lost in that three decades, while the Queensland government has facilitated the creation of extra public open space by converting part of the existing long-term leases.
Dexus recently offloaded its 50% stake in Sydney’s landmark Grosvenor Place tower for $925 million to China Investment Corporation. Last year it also sold the 452 Flinders Street city building in Melbourne for more than $450 million, as it moved forward with its plans for developing a $2.5 billion tech precinct around Sydney’s Central with Frasers Property Australia.
Australia’s largest office landlord, the group is reportedly among the final few bidders vying for Blackstone’s mammoth Milestone Logistics portfolio, comprising 45 assets mostly along the major east coast markets and worth an estimated $3.5 billion-plus.
Dexus’s office portfolio is heavily weighted the major markets of Sydney and Melbourne, both of which have seen vacancies spike over the past 12 months and occupancy remain low early in the new year.
Property Council of Australia data showed Brisbane CBD office vacancies had lifted from 12.9% to 13.6% during the second half of 2020. While vacancies grew, this was among the better performances as markets across the country saw an increase in empty desks because of the pandemic.
“As a Brisbane-based and focused investment firm we are thrilled to be acquiring one of Australia’s best known office towers,” Marquette managing director, Toby Lewis said:
“We are acquiring a great asset with an excellent tenancy profile due to Dexus’s best-in-class management.
“Despite the ongoing long-term uncertainty associated with the COVID-19 pandemic, we have enabled more than 150 Australian families to invest in 10 Eagle Street and look forward to delivering strong returns as Brisbane continues to grow as a city and a city to invest in.”