Strong prices paid for major offices in Brisbane, Gold Coast
Brisbane’s Pidgeon property family has netted $295 million from two office sales in the city’s CBD this year after selling 299 Adelaide Street for $85 million.
It was bought by an offshore investor on a capitalisation rate of 5.25 per cent following an off-market campaign through CBRE and JLL just a few months after the family sold nearby 310 Ann St to AsheMorgan for $210 million.
Leased to Department of Immigration and Border Patrol, the 10-level building at 299 Adelaide Street attracted solid interest from local and international investors.
The buyer is a European client of investment bank UBS and the deal remains subject to Foreign Investment Review Board approval.
It is understood the two sales are part of a generational wealth distribution plan by the Pidgeon family, which has been developing and owning Brisbane real estate since 1927.
F.A. Pidgeon was run for decades by Sir John Pidgeon and his sister Valmai.
They joined the family company, founded two decades earlier by their father Frederick, in the 1940s after World War II, growing it into one of Queensland’s leading construction businesses.
Sir John died in 2016 and the family’s property strategy is now overseen by his daughter Liz Pidgeon, a director of Cornerstone Group, which developed and managed both buildings for F.A. Pidgeon & Son.
According to the Cornerstone Group website, F.A. Pidgeon and Son still owns a 15-level office building at 300 Ann Street among many other properties including Spring Hill Marketplace.
Meanwhile, on the Gold Coast, GDI Property Group has sold 50 Cavill Avenue to the Elanor Commercial Property Fund (ECF) for $113.5 million after an extensive refurbishment and leasing program.
GDI’s managing director Steve Gillard said it bought the building for $48.75 million in early 2016 and will use the sale proceeds to pay down debt.
ECF is raising $84.7 million to fund the purchase: $45 million through a one-for-five share offer and $39.7 million via an institutional placement due to close late on Monday.
Fund manager David Burgess said 50 Cavill Avenue was the Gold Coast’s “pre-eminent” office building and was acquired at a capitalisation rate of 6.8 per cent.
“This investment typifies ECF’s strategy of acquiring assets that have strong competitive advantages in their respective markets,” Mr Burgess said.
He also announced preliminary annual financial year results for ECF, featuring better than expected funds from operations (FFO) of 12.54 cents per security and total dividends per security of 10.03 cents.
Portfolio valuation rose $5.9 million over the year to the end of June to $384.5 million at a weighted average capitalisation rate of 6.6 per cent.
Looking ahead, ECF is forecasting FFO of 10.8 cents per security and dividends per security of 9.4 cents per security.
The Cavill Avenue acquisition is expected to settle on August 31.
