Sentinel in CBD swoop

May 31, 2019

Phil Bartsch | Courier Mail

Sentinel Property Group has inked its largest ever deal to acquire a fully leased, prime positioned Brisbane CBD office building.

The Brisbane-based fund manager has paid $103 million for the 14-level Makerston House in the city’s North Quarter precinct.

It is the biggest single asset purchase in its decade-long history and reflects a highly competitive net passing yield of 7.85 per cent. Makerston House is on a 1796sq m site at 30 Makerston St, opposite the Queensland Police Service headquarters and 50m from the Brisbane Transit Centre.

It has been divested by Australia’s largest annuities provider Challenger, which had held the asset since acquiring it for $33.6 million in 2006.

The office building will be the 10th addition to the Sentinel Regional Office Trust, which since 2016 has amassed a significant portfolio of assets worth more than $350 million.

They include properties in Brisbane, Darwin, Townsville, Cairns, Newcastle and Port Macquarie.

Makerston House is a modern office building with a five-star NABERS Energy rating and comprises a net lettable area of 14,640sq m over 14 levels with 179 carparking bays across five basement levels.

The asset is underpinned by strong cashflow security as it is 100 per cent leased with a 4.63 year weighted average lease expiry. Its tenants include the Queensland Government as well as various state government corporate entities plus commercial carparking company Secure Parking, and has fixed annual rental reviews ranging between 3.5 and 4.0 per cent.

Earlier this year, state rail operator Queensland Rail took over a new lease over 2000sq m in the B-grade building after relocating from the Brisbane Transit Centre.

Sentinel Property Group managing director Warren Ebert said Makerston House was superbly positioned in the CBD’s evolving North Quarter precinct, at the epicentre of some of the city’s multi-billion dollar infrastructure projects including the $5.4 billion Cross River Rail network and the $2.1 billion Brisbane Live precinct.

“This is a fantastic acquisition for Sentinel and is our biggest purchase since the group started 10 years ago,” Mr Ebert said.

“Makerston house is a tremendous asset that is in the heart of a precinct accommodating the state’s critical legal infrastructure and services, including the Queensland Supreme Court and District Court and the Brisbane Magistrates Court.

“The building is opposite the Queensland Police Headquarters and just 50m from Roma Street Train Station, the only existing CBD railway station that will link to the high capacity Cross River Rail.”

Mr Ebert said Sentinel was excited to add Makerston House to its growing Sentinel Regional Office Trust.

Two years ago, it secured the A-grade office building at 200 Creek Street in Spring Hill, on the doorstep of the Brisbane CBD, for $38 million from Sydney-based fund manager Centuria Property Funds.

The Trust also comprises 11 Argyle St, Newcastle, the CasCom Centre at Casuarina in Darwin, 8 Buller St, Port Macquarie, Jacana House and Arnhemica House in Darwin, and Central Plaza and River Quays in the Townsville CBD.

Established in 2010, Sentinel has a national portfolio of more than 40 retail, industrial, office, land, tourism infrastructure and agribusiness assets worth in excess of $1.14 billion.