A fully-leased asset, strategically positioned in a major growth corridor of Inner Brisbane has been snapped up in an off-market deal. The property was purchased for $16.875 million by Properties & Pathways from Western Australia and negotiated by Matt Barker and Blake Goddard of Knight Frank.
The strong tenant covenant, with the 3,217 sqm building being occupied by Fitness First for 15 years was a drawcard for buyers, along with the asset’s future redevelopments potential.
The sale represents the final piece of a property puzzle that was started by Alceon in 2018 with the acquisition of 25 Montpelier Rd, Bowen Hills. Alceon acquired the Bowen Hills property with the aim of relocating Ladbrokes headquarters to the remaining vacant space in that building. In doing so, it underwrote the lease tail at 461 - 471 Lutwyche Rd and subsequently went on to acquire both 461 and 471 Lutwyche Rd. 471 Lutwyche Rd was subsequently sold to owner occupier, CoAsIt in 2020. 25 Montpelier Rd was sold to Centuria in 2019 and the sale of the Fitness First gym now closes out that the multi-faceted transaction.
The Fitness First Building at 461 Lutwyche Rd, consists of a commercial office building on a 2,602sq m site that has been converted for use as a health and wellness facility and has been tenanted by Fitness First for 15 years, with six years remaining on the current lease. It was sold with a WALE of 6.3 years, a net passing income of $1,029,411 and an initial yield of 6.10%. The Properties & Pathways Trust was oversubscribed in 24 hours by their loyal investor base showing strong demand for their hands-on-management style, underpinned by high-quality assets.
Mr Barker said the property was attractive to buyers as the income was underpinned by a long-term lease to a highly experienced and long-established Fitness First gym, but it also offered future redevelopment potential.
“The buyer was attracted to the asset due to its long WALE and the strong covenant, with an income stream that will provide Properties & Pathways with solid distributions to their investors,” he said
“The asset offered a highly secure income to a secure tenant with a 6.3 year WALE, and fixed three per cent annual rent reviews, with a below market rental profile providing significant reversion potential,” he said.
“The property’s fundamentals, including large floor plates, excellent natural light and a high-exposure corner position, also provide the opportunity for adaptive re-use for other occupiers including medical, office and other similar uses.
“The elevated site is zoned DC2, providing long-term development potential in a strong performing inner-city precinct.
“The asset is also well maintained, with a significant recent building upgrades meaning there were no immediate CAPEX requirements.”
Mr Goddard said the property was in a solid location in Brisbane’s inner city, being a high growth suburb and an affluent location.
“It’s situated on a highly-exposed site on a main road, with easy access both into the city and out of the city,” he said.
“Market Central Lutwyche, a neighbourhood shopping centre anchored by three supermarkets, which has just had a $60 million extension, is just two minutes away, with plenty of other amenity in the surrounding area.”
