British Co. Buys Office Building in Canberra, Australia for $152M

U.K.-based Brompton Asset Management has acquired the 15-story Industry House building in the Canberra commercial business district for $152 million. The transaction ranks as the largest deal of its kind in the capital city’s office market this year.

Industry House in Canberra

U.K.-based Brompton Asset Management has acquired the 15-story Industry House building in the Canberra commercial business district for $151.7 million. The transaction ranks as the largest deal of its kind in the capital city’s office market this year.

The Andrew Roberts-backed property funds manager, CorVal Partners, sold the class A asset at 10 Binara St. on a yield of 7.5 percent. The sale was brokered by Jones Lang LaSalle agents Rob Sewell, Simon Storry and Greg Lyons.

Completed in 2006, the complex offers nearly 270,000 square feet of office space on 11 levels, along with three levels of parking, ground floor commercial, retail and child-care facilities. According to The Australian, CorVal bought the building in 2009 from an AMP Capital fund for $123 million.

Brompton Asset Management’s acquisition of the Industry House tower marks its second purchase in the Canberra office market. The company owns another major property at 255 London Circuit. Both assets hold strong federal government lease covenants.

“Sovereign wealth funds and global pension funds have re-rated real estate, placing a higher weighting on the defensive characteristics of the asset class and increasing allocations to the sector. The most passive of offshore capital is seeking modern assets, strong covenants, long lease terms (with stipulated fixed increases) and increasingly the latest in sustainability credentials. There are few better covenants in the world than the Australian government,” JLL’s Head of Office Markets Australia, Sewell, said in a news release.

Head of International Investments Australia, Storry, noted that office markets, underwritten by public sector covenants, have received strong investor interest since 2008.

“For example, cap rates in Washington and Brussels have compressed by between 1.5 percent and 2.5 percent; Canberra, in contrast, has moved in the opposite direction.  The midpoint of the Canberra cap rate range has edged slightly higher, while at the tight end, cap values have compressed by only 0.5 percent,” Storry added.

According to Jones Lang LaSalle Research, Canberra is the youngest CBD office market in Australia, with 40 percent of its assets aged less than 10 years.