The tower at 480 Queen Street in the Brisbane CBD is anchored by BHP’s Queensland headquarters.
Dexus is stepping up its office sales program, winning strong bids on a Queen Street skyscraper it controls in Brisbane, with the asset likely to trade close to its $680m book value.
The impending deal for 480 Queen Street would rank as the city’s largest office sale and displays the strength of the Queensland capital.
Investors are chasing assets in the belief that rentals will increase amid a space squeeze at the prime end of the market.
Dexus and its unlisted Dexus Wholesale Property Fund ran an off-market process for the tower that serves as BHP’s state headquarters, as both have been selling large offices, including the NBN headquarters in North Sydney.
The listed group is looking to diversify away from office ownership and keep gearing in check, while the unlisted vehicle has made large inroads into paying redemptions to exiting investors.
The building sale was strongly contested, attracting a field of bidders including Investa and GPT, with those companies interested for their growing funds businesses, although international investment house Barings is believed to be leading the field.
The parties and JLL agents Paul Noonan, Luke Billiau and Jack Sullivan all declined to comment.
480 Queen Street is located in Brisbane’s Golden Triangle.
Barings was in the headlines earlier this month for leading a consortium that bought Moorabbin airport in Melbourne for $1.5bn, but also has a major office management platform. It is focused on high-quality assets and last year snapped up Darling Square in Sydney for $360m.
Barings has been active in Brisbane in other fields and, with superannuation giant Aware, bought the WeAreLiving Brunswick build-to-rent complex in Brisbane for about $285m.
Dexus declined to comment but the company has been reshaping its Brisbane portfolio with its funds committing $1.3bn for a half share of Westfield Chermside last year, and it is developing the $2.5bn Waterfront Brisbane, which is expected to open by the end of 2028.
Dexus has been hit by uncertainty about the future of its infrastructure unit, after the company said it would undertake a strategic review of the $7.3bn business.
That came after it lost a court case to force the sale of the 27.3 per cent stake in the company that owns Melbourne and Launceston airports. But Dexus intends to continue its property strategy of pushing into funds and logistics.
A transaction in Brisbane would lock in the Queensland capital’s reputation as the most liquid market in Australia.
Dexus held its 50 per cent stake in the Queen Street tower at $341.9m on a capitalisation rate of 6.5 per cent. The listed company and its wholesale fund jointly acquired the building from Grocon in 2013 when it was still under construction. They paid an estimated $543.9m on completion.
The 31-level premium-grade office development spans 55,561sq m of office space located in Brisbane’s Golden Triangle, with dual access via Queen Street to the southeast and from Adelaide Street to the northwest.
BHP anchored the tower and has renewed its lease. PwC moved its Brisbane headquarters to the Dexus project in 2016. It took about 6900sq m or four floors in the block. Herbert Smith Freehills and Allens are also tenants.
Dexus is separately looking to sell off two buildings in Sydney, and one in Brisbane to property funds group Investa in a $700m exit. Investa is targeting the nearly empty 30 The Bond, as well as a smaller heritage building in Sydney, and is also buying 123 Albert Street in Brisbane.