The Forza George Street Fund was an unlisted property fund which acquired a fully refurbished 6,285m² commercial office building in the Brisbane CBD. Located within the North Quarter of the CBD, the Property comprised 13 office levels together with ground floor retail tenancies and basement car parking.
The Property was purchased for $20,000,000 ($3,182m²) which was significantly below the replacement cost of the building. Between 2007 and the date of purchase, over $10,500,000 had been spent on upgrading and refurbishing all services, lift cars, lift motors and controls, amenities to all levels, the ground floor foyer and entrance, the façade, as well as the installation of new end of trip facilities (showers, toilets, bike racks and lockers) and tenant fit out works across all levels.
The asset was purchased at a price discount far greater than the cost of stabilisation. This created a favourable risk/reward dynamic which yielded a great financial result for investors.
At the time of purchase, the Brisbane CBD had extremely high vacancy at 25%, and the property was 88% vacant. The high vacancy of the property was the result of the departure of a key tenant, the Department of Transport, due to the former Newman Queensland Government’s public sector cutbacks. It was in no way a reflection of the quality of the Property and this vacancy in itself provided the investment opportunity.
The investment strategy was to offer highly cost competitive leases to tenants looking to upgrade and effectively “buy” tenants. This strategy, combined with a hands-on active management approach, saw the occupancy rise to 96.4% over 4 years – a total turnaround achieved against the background of a tough leasing environment. The Property was sold in July 2019 for $42,100,000 to a private Australian investor.
