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News release


The largest office transaction in Canberra this year, as Industry House sells for $151.7 million

UK-based Brompton Asset Management secures its second purchase in the Canberra office market

CANBERRA, 16 AUGUST 2013 – The 15-storey office tower, Industry House in the Canberra CBD has been sold for $151.7 million – in the biggest office transaction in Canberra this year.

The A-grade office property at 10 Binara Street has been acquired by UK-based Brompton Asset Management from CorVal on a yield of 7.5%. The deal was transacted by Rob Sewell, Simon Storry and Greg Lyons from Jones Lang LaSalle.

Head of Office Markets Australia, Rob Sewell said, “This is the second purchase in the Canberra market by Brompton Asset Management, which also owns another major office asset at 255 London Circuit. Both properties 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,” said Mr Sewell.

Head of International Investments Australia, Simon Storry said, “Office markets, under-written by public sector covenants, have received strong investor interest since 2008.

“For example, cap rates in Washington and Brussels have compressed by between 1½ per cent and 2½ per cent.  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 ½ of a per cent,” said Mr Storry.

Jones Lang LaSalle Research shows that Canberra is the youngest Australian CBD office market, with 40% of assets aged less than 10 years. The quality of income in Canberra is high, with 60% of office space occupied by the AAA-rated Federal or ACT governments.