One of the Sunshine Coast’s best known office blocks, a high-profile building in Minyama that more than 65,000 vehicles pass by each day, has been sold for $7.5 million. And the new ownership group includes two tenants who wouldn’t want to work in any other building.
The sale of 9 Nicklin Way, Minyama, was brokered by Brisbane commercial agent Sam Richards, of Jones Lang LaSalle (JLL), who contacted Sunshine Coast fund manager RM Capital in early December to present the opportunity.
“We were able to broker an off-market deal fairly quickly,” Mr Richards said. “It was the second time we’ve represented this particular private Brisbane-based investor group on a sale. And in this instance we could see RM Capital would be an ideal buyer.”
RM Capital Director Remi Rafter, who believes the building is one of the best office blocks in the region, said a deal was agreed within days and signed off on 12 December. Settlement is scheduled for 3 March.
A property fund – to acquire, improve and eventually sell the property – was established with a target offer amount of $4.2 million. Individuals associated with RM Capital, the investment arm of Rafter Myers, took up $1 million of the equity, while long-term tenants Grenfell Murray and Diamond Partners snapped up the remaining $3.2 million. The balance funds were provided by National Australia Bank.
Mr Richards said the asset has a mix of secure income in the short term, but with a 2.5-year WALE, there will be increased value when rents are reset in the next few years.
Brendon Murray, a partner of Grenfell Murray, who had worked for accounting giant Bentleys before acquiring the firm’s Sunshine Coast business, said it had always been his dream to own the premises in which his company worked.
“I think it’s the best office building on the Sunshine Coast. And the signage!” he said. “Do you realise how much it would cost to have a billboard that size?”
Mr Rafter said the target amount was reached very quickly. “All it took was a couple of phone calls. Everybody understood the potential of the asset.”
The 2,146sqm office complex, situated on one of the Sunshine Coast’s busiest arterial roads and within the centre of the Minyama/Kawana Waters CBD, includes 40 car parks and 1,234sqm of commercial space across two levels.
Tenants include real estate agency Coronis, accountants Grenfell Murray, financial planners Diamond Partners, and Martens Wealth Management, legal firm Hawkes Lawyers, and building services and compliance consultancy Building Approvals.
Mr Rafter said it would cost more than $11 million to rebuild the asset. “In fact you can’t build new office blocks in the current market,” he said. “It’s just too expensive.”
“Sunshine Coast office vacancy is presently 4.3%,” he said. “That’s the lowest on mainland Australia.”
He said the tenants of 9 Nicklin Way were presently paying an average net rent of $410 per square metre, a figure which he indicated was substantially below its true value.
As well as enjoying an extraordinary profile, Mr Rafter said a feature of the building was its exceptional floorplates, which provided an open, inviting atmosphere for employees and clients.
“And the signage is just incredible,” he said.
The strategy for the fund which now owns the property is to provide an estimated 82 percent return over a five-year investment period – made up of quarterly cash distributions and capital uplift should the building be sold after five years.
Mr Rafter said with two of the tenants potentially holding most of the equity, it is possible – even likely – the building will not be offered for sale at the end of the investment period.