By BEN WILMOT, COMMERCIAL PROPERTY REPORTER
12:00AM MAY 2, 2019
Property group Fortius Funds Management has emerged as one of the busiest property traders of the year by selling a tower in the heart of Brisbane to the Kyko Group for $126.7 million and then targeting an Adelaide office block for about $42m.
In the Brisbane play, Fortius and backer BlackRock unloaded the tower at 201 Charlotte Street to the private Kyko Group after the site boosted its performance over the past four years. Kyko could add further value to the property. It operates across the office, retail, residential and hospitality sectors and the tower suits its active investing style.
Fortius and two private funds run by BlackRock bought the A-grade tower in the heart of the Golden Triangle in Brisbane in 2015 for $81.5m.
The sale, flagged in The Australian last month, was handled by CBRE’s Flint Davidson and Tom Phipps and Justin Bond and Ben McGrath of Knight Frank. It showed an initial yield of 5.94 per cent.
Mr Davidson said there were five bids from local groups and three international offers, underpinned by the property’s strong tenancy profile, CBD location and the current strong investor focus on Brisbane opportunities.
“Brisbane is one of the most heavily traded markets in 2019, with investors finding favour in higher returns and improving fundamentals. We anticipate similar transaction volumes in the second and third quarter,” Mr Davidson said.
The A-grade Charlotte Street tower has a net lettable area of 13,291sq m and stands 16 storeys. Anchor tenant, resources company Anglo American Metallurgical Coal, recently extended the bulk of its space until 2028.
The building is 87 per cent occupied and has a weighted average lease expiry of five years after Anglo’s recent recommitment to the property.
Mr Phipps noted that Brisbane’s strong economic fundamentals had been a key drawcard for prospective purchasers.
He added that significant yield spreads to Sydney and Melbourne were attracting buyers to Brisbane as a “value proposition with genuine growth prospects”.
Fortius and BlackRock are believed to be teaming up again for the purchase of Adelaide’s 99 Gawler Place, marketed through agents Knight Frank and CBRE.
The A-Grade building is being sold by US private equity group Blackstone, which it picked it up as part of SA’s Motor Accident Commission portfolio.
The 14-storey office tower is also being readied for further improvements to capitalise on that city’s rising market.
