Super Fund in $150m Swoop on Brisbane's The Barracks

Aware Super’s property platform has inked a deal to buy a landmark Brisbane commercial, retail and entertainment precinct for about $150 million.

It has exchanged contracts for the purchase of The Barracks, with a view to reinvigorating the five-building complex spanning an historic 1.09ha site on the CBD’s doorstep.

The 19,433sq m centre at 61 Petrie Terrace has been divested by Fortius Brisbane Barracks Trust, an unlisted single asset trust. It paid $162.32 million for the asset in 2018.

The Barracks integrates three heritage-listed buildings with a modern A-grade office tower and retail precinct anchored by Coles and Palace Cinemas.

Overall, it includes 10,393sq m of office space and 9040sq m of retail tenancies as well as parking space for 451 cars.

Aware Real Estate’s head of investments and capital transactions Pete Carstairs said it was a high-quality urban asset that offered immediate income and the opportunity to unlock further value.

Its key strategic initiatives include retail and food and beverage leasing activation, upgrades to the office buildings and improved precinct placemaking.

“We’ve got a healthy amount of capital expenditure budget to reinvigorate the precinct,” Carstairs told The Urban Developer.

“At the moment, it's about 97 per cent occupied…there’s a few F and B tenancies that have been vacant for a little while.

“And we’re looking to improve the presentation of the centre and drive some really strategic leasing. Then, once we’ve done a bit of work, we’ll be looking to relaunch The Barracks.”

Aware Real Estate’s latest portfolio addition follows its first Queensland investment—last year’s $215.5 million acquisition of 145 Ann Street, a 27-storey office tower in the city’s uptown precinct near the historic King George Square.

Carstairs said the Brisbane market offered a compelling investment landscape across the asset classes—office, retail and industrial—that Aware Real Estate is targeting.

▲ The Barracks mixed-use complex at 61 Petrie Terrace.

“We really like the thematic of the Brisbane market, particularly with the Olympics coming up,” he said.

“[It] solidifies our view that buying assets below replacement cost is an attractive thing to do at the moment.

“Given that we kind of know with all the construction that’s coming…that just by its nature it’s going to drive up costs. So we think that really makes it hard to go wrong.

“And also in terms of market vacancies, the office vacancy rate in particular in Brisbane is the lowest or one of the lowest in the country, and we’ve been getting really good results at Ann Street.

“So there’s some good drivers there that we think we can capitalise on.”

The Barracks was taken to market by JLL’s Paul Noonan and CBRE’s Bruce Baker.

“There’s a lot of investment going on in the immediate vicinity, with quite a lot of residential development of different kinds, from student [accommodation] to build-to-rent and build-to-sell,” Carstairs said.

“There’s just so much coming over the next five to 10 years that we think that this can’t help but drive extra performance from the retail portion of the site.”

Another key drawcard was The Barracks’ ESG credentials, with a 6-Star NABERS Energy Base Building rating and a 6-Star NABERS Water rating across both the modern and heritage office buildings, and its 335kW rooftop solar installation supporting peak load reduction.

Aware Real Estate chief executive Tracey Whitby said The Barracks acquisition “further diversifies our national portfolio and reinforces our commitment to investing in vibrant, well-connected urban precincts”.

Aware Super’s head of property, Alek Misev added: “With a property portfolio valued at more than $2 billion, we’re focused on opportunities like The Barracks that combine resilient income streams with value-creation potential…[and] align with our long-term strategy to deliver strong, sustainable outcomes for our members”.

Meanwhile, it is understood Aware Super and asset manager Barings are close to finalising a deal reportedly worth about $300 million to acquire Frasers’ Brunswick & Co build-to-rent development, near inner-city Brisbane’s Fortitude Valley train station.