Office Sell-Down in Wake of Takeover Bid Collapse

Three office buildings, in south-east Queensland and the ACT, are being put on the block as part of a sell-down by the ASX-listed Australian Unity Office Fund.

The move follows a $400-million takeover bid by Aliro Group, led by Charter Hall co-founder David Southon, being taken off the table last month.

The trio of assets is being offered through expressions of interest campaigns conducted by Colliers and Knight Frank and collectively could fetch about $150 million.

Two Queensland properties—a 19-level office tower at 150 Charlotte Street in Brisbane’s CBD and seven-level boutique office building at 90-96 York Street in Beenleigh—are among the sell-down.

Adjacent to the city’s Golden Triangle commercial precinct, the A-grade Charlotte Street asset comprises about 11,080sq m of net lettable area and underwent a $21-million refurbishment in 2012.

“The Brisbane CBD is currently undergoing a transformation, with infrastructure projects in the pipeline and public transport projects set to improve the city, as well as accessibility,” Knight Frank’s Justin Bond said.

“Charlotte Street will benefit more than most locations from this activity and shall also be boosted by its proximity to Albert Street, where the first CBD train station in more than 120 years is being built.”

Construction of the York Street Beenleigh asset was completed this year and comprises about 4650sq m of office space with a weighted average lease expiry by income of 8.4 years. About 86 per cent of its income is underpinned by a 10-year lease to the Logan City Council.

▲ The assets being put to market (clockwise from left) 90-96 York Street, Beenleigh; 64 Northbourne Avenue, Canberra; and 150 Charlotte Street, Brisbane.

The third asset being offered sits on a prominent corner with three street frontages at 64 Northbourne Avenue in Canberra. It comprises 6375sq m of fully-leased office space over six levels, of which 50 per cent is occupied by the Commonwealth government and defence force recruitng.

“Strong leasing fundamentals underpin the ACT office market, and in particular the Canberra CBD which supports future renewal or reletting prospects,” Colliers’ Matthew Winter said.

“The significant site area of 1500sq m-plus with wide exposure, including to the ACT light rail terminus may also provide future redevelopment prospects.”

Latest data from the Property Council of Australia indicated that tenant demand rose 0.5 per cent across key office markets in the nation’s capital cities.

Demand for office space was strongest in Brisbane at more than three times the historic average, with Sydney, Perth and Adelaide also above average, while demand grew by 0.1 per cent in Melbourne and dropped in Canberra by 0.1 per cent.

Canberra remains the nation’s tightest office market despite vacancies rising from 6.3 per cent to 8.6 per cent.

The Australian Unity Office Fund has a portfolio of eight assets across NSW, Victoria, Queensland, South Australia and the ACT with a total value of $539.8 million.

According to the fund, the office buildings in Brisbane and Beenleigh were valued in July at $77.1 million and $33.52 million, respectively, and the ACT asset at $32.5 million.

It has been a tumultuous few years for the fund, enduring an unsuccessful $495-million takeover proposal in 2019 by Charter Hall and Abacus Property Group; a failed bid to merge with an unlisted Australian Unity fund earlier this year; followed by the recent collapse of the Aliro buyout offer.