PGIM Real Estate and Fortius Funds Management have entered a 50/50 joint venture in Australia to buy a A$214.8m (€135m) office building in Brisbane from LaSalle Investment Management.

The acquisition of the 307 Queen Street building is PGIM’s first venture with Fortius. It is, however, PGIM’s second office acquisition in Brisbane – PGIM acquired an asset jointly with Marquette Properties, for A$77m in 2019.

Steve Bulloch, managing director and head of Australia at PGIM Real Estate, told IPE Real Assets: “The Brisbane market is attractive due to the city’s future economic and demand forecasts, continued infrastructure spend and potential for strong interstate migration.

“We also expect increasing offshore investor interest.”

Despite prevailing uncertainty on the future of office, Bulloch said: “We see an acceleration of the structural shift to higher-amenity, well-located CBD office assets which demonstrate strong sustainability characteristics.”

Sam Sproats, Fortius chief executive, said:  “We have previously transacted in Brisbane and we do see attractive opportunities in the market.”

The recently renovated building offers more than 19,600sqm of space and has 65 tenants.

Currently, it was 95% leased and had an average weighted lease expiry of 3.5 years, Sproats said.

“As we continue to navigate the pandemic, there is an opportunity to capitalise on the dislocated office sector and to find value.

“As workers return to the office and cities are revitalised we are seeing interest from domestic and international investors, who are looking for agile assets with strong market fundamentals,” said Sproats.

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