The Forza 365 St Pauls Terrace Fund has sold 365 St Pauls Terrace and 105-109 Alfred Street, Fortitude Valley on an unconditional basis for $13 million.
The asset was sold to established Melbourne development group Vicland headed up by Bill McNee.
The property comprises 2,052m2 of land and had recently obtained development approval for 260 apartments across two 25 level towers. Based on the $13m sale price, this equates to $50,000 per unit site.
The site was acquired by the Fund in October 2013 for $7.07m. Over the life of the investment the Fund has provided investors a cash yield of 6% per annum and based on the sale price, the investors IRR is approximately 36% per annum.
Forza Capital director Ashley Wain said “we are delighted with the result for our investors. We acquired an income producing site that we felt was substantially undervalued. Based upon a potential development outcome, the Fund acquired the site for the equivalent of $27,000 per unit site at a flat point in the cycle and we identified an arbitrage by aggregating two neighbouring landholdings. When held jointly, the land holdings provided for a 25 level development outcome whereas the sites individually could only developed to a height of 15 and 12 levels respectively. Whilst we were assessing the investment options for the land holding, the asset was fully leased providing our investors income which provided an outstanding risk adjusted investment strategy.”
Co-director Adam Murchie said “We identified the site as a strategic income producing investment recognising the inherent long term potential of the Fortitude Valley precinct. Since we acquired the asset, the Fortitude Valley precinct has continued to mature and given recent strong market performance, we saw an opportunity to exit this investment and look at alternative opportunities. We continue to seek investments in the Queensland property market and believe that high density residential has a strong role to play in the broader Brisbane urban fabric”.
The site was acquired by prominent Melbourne based development group, Vicland, which has a number of very prominent development projects in Melbourne and over 1,500 apartments in its pipeline. Mr Wain said “we believe Vicland have acquired an excellent project. Our Fund did not have a mandate to develop however we believe this site has very strong fundamentals and is strategically placed in an emerging high end precinct with neighbouring projects such as Gurner’s FV and the RNA Showgrounds redevelopment”.
The sale was negotiated by Darren Collins and Mike Walsh of CBRE Brisbane.