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Fortius buys Brisbane’s The Barracks for $162m

Thursday, November 22, 2018 Fortius Funds Management has bought a major mixed-use complex in Brisbane, known as The Barracks, from financial services company Challenger for about $162 million.

The purchase, flagged by The Australian last month, adds to the flow of capital into the city, with big players including Growthpoint, Charter Hall, M&G Real Estate and ARA buying.

Fortius raised about $85m of equity for the deal, including a major slice from US funds house Heitman, to back the unlisted trust it set up to acquire the asset.

The building was sold by Challenger’s life unit, which bought the complex in late 2014 and improved it, taking its commitment to $153.9m.

Fortius has been active in Brisbane and, with BlackRock, bought and refurbished a 16-storey office tower in Charlotte Street. The firm in 2015 also sold a government-occupied tower in Brisbane’s Fortitude Valley for $50m to local group Keystone.

Fortius director Sam Sproats said the attraction of The Barracks was its mixed nature, with office and retail elements that generated diverse income streams.

Fortius tapped wholesale investors for the remainder of the capital in its unlisted Fortius Brisbane Barracks Trust. Overall, the property is 90.4 per cent leased to office and retail tenants, with a weighted average lease expiry of 5.3 years, allowing for a repositioning.

Mr Sproats said this was in keeping with the firm’s active management style and there was an opportunity for an element of co-working in the building that might suit technology users.

“It’s quite a unique offering in the Brisbane CBD fringe market,” he said.

Fortius could also reset the way in which income is generated by a carpark and cinema to draw more customers to the dining precinct.

Challenger acquired The Barracks for about $143.95m from developers Property Solutions and QM Properties and also remixed the office and retail components.

CBRE’s Flint Davidson and Joe Tynan and Colliers International’s Don Mackenzie handled the latest deal.

Fortius recently bought the Home HQ Artarmon homemaker centre in Sydney’s northern suburbs from US private equity house Blackstone for $140m. Mr Sproats said the group had picked up that centre as part of a play on the area’s increasing urbanisation and density and, in that case, it won the backing of BlackRock and the listed URB Investments.

The firm last year purchased an office tower in Sydney’s Goulburn Street from Singaporean developer Roxy-Pacific Holdings in a $158m play.
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