Commonwealth Managed Investments Limited, the Responsible Entity of Commonwealth Property Office Fund (CPA), announces the acquisition and settlement of 10 Eagle Street, Brisbane. The 28,000 sqm A-grade CBD office building was acquired for $195 million1 from Brookfield Australia Funds Management Limited (‘Brookfield’) in an off-market transaction. The asset was independently valued on a capitalisation rate of 7.5%.
CPA Fund Manager, Charles Moore, said: “Due to our strategic asset recycling program, active debt restructuring and subsequent low levels of gearing, we are well positioned to pursue value enhancing opportunities in the market.” Mr Moore said the asset, located in the heart of Brisbane’s ‘golden triangle’, has been acquired at an opportune time in the cycle and the purchase yield compares favourably with the Fund’s cost of debt, which will reduce to 5.9% per annum post acquisition. Angus McNaughton, Managing Director of Property for Colonial First State Global Asset Management said: “This asset provides the Fund with an outstanding opportunity to apply our proven active asset management model to enhance value in the near to medium term.”
Originally developed in 1978, 10 Eagle Street provides 30 levels of office accommodation with a net lettable area of 28,000 sqm. The acquisition price reflects the Fund’s plans to continue a capital works program (which is well progressed) and which includes the installation of destination control lifting, T5 lighting and sub-metering, to actively manage power usage which will assist in lifting the building’s NABERS energy rating from 3.5 stars to 4.5 stars.
Commonwealth Property Office Fund is an office sector-specific Australian Real Estate Investment Trust (A-REIT) which invests in prime quality office property located in central business districts and major suburban markets across Australia. Its stock market trading code is CPA. The Fund is managed on behalf of more than 25,000 investors from 28 countries. CFSGAM is the consolidated asset management arm of Commonwealth Bank of Australia, and sits within the Bank’s Wealth Management division. Entities within CFSGAM provide management services to the Trust.