Melbourne-based company Quintessential Equity has purchased an office tower in the city for $23 million in an off-market transaction.
The sale of the 13-storey building at 14 Moore Street between Quintessential Equity and Dexus Property Group was settled on Wednesday. It is the company's third foray into the Canberra market.
Quintessential Equity head of property Russell Bullen said they had gone into the deal with ''their eyes wide open” about the difficulties they faced in the post-budget Canberra market.
“We went into it knowing that the budget was going to be tough and ... whilst all the job layoffs aren’t going to appear in Canberra, Canberra is going to be impacted significantly by them,” he said.
“Hence why we wanted to make sure we acquired a property that would appeal not only to government but also to private enterprise.”
The unlisted property fund manager agreed on the sale with Dexus about six months ago when the building was only 18 per cent tenanted.
Mr Bullen said the two had worked together since that point and had agreements in place with tenants to lease a further 25 per cent of the building.
Dexus Property Group had recently completed a major upgrade on the base building services, including new destination lifts, designed to achieve a 4.5 Star Nabers energy rating.
The new owners will complete more aesthetic work to improve the comfort of workers.
Mr Bullen said Quintessential Equity had acquired the property for a price that enabled them to be competitive in luring tenants into leases.
“We’re pretty confident that the price we paid for it will allow us to compete well from an economic standpoint,” he said.
Jones Lang LaSalle ACT head of sales and investments Greg Lyons said it was a good transaction for the current market in what was a risky purchase due to the age of the building and office vacancy rates.
“It is a big challenge but I think they’ve seen it’s in a good location, the bones of the building are quite good,” he said. “The price reflects that it was 80 per cent vacant.”
Mr Lyons said there were interstate investors looking at the territory due to high prices and competition in the Sydney market, but there had been few assets on the market this year.
The Manning Clarke Offices at 186 Reid Street in Greenway was sold last month for $25.8 million.
Quintessential Equity purchased Penrhyn House in Phillip for $14 million in June 2012 and are completely refurbishing and upgrading the aged office building to attract a new government tenant.