Paul Lederer’s private group is expanding into property funds. Picture: Nic Walker
Billionaire Paul Lederer intends to take the next step growing his property funds empire by purchasing a major Brisbane office building under a $255m deal.
His private LDR Capital operation is buying the Southpoint office building in Brisbane from German fund Union Investment Real Estate, and is seeking to bring wealthy investors into the deal.
Savills agents Ben Schubert and Seb Turnbull, and CBRE’s Peter Chapple and Bruce Baker are handling the deal but declined to comment, as did the parties.
The billionaire, best known for co-founding and leading the Primo Group, and as a co-owner of the A-League’s Western Sydney Wanderers, has emerged as a counter-cyclical property buyer and wants to set up a wider operation.
He last year made his entry into the large-scale office market with the purchase of the Sirius complex in Canberra from listed giant Mirvac for about $305m. The block’s purchase added to Lederer Group’s wider property holdings.
Mr Lederer last year made a successful play for the Elanor Commercial Property Fund and has since renamed it, and plans to restore its fortunes.
His investment group should capitalise on Mr Lederer’s substantial wealth, which is estimated at $1.98bn in The List – Richest 250, and the cachet his name brings to draw investors.
He would take a 25 per cent interest in the new fund buying Southpoint at 275 Grey Street. The building is anchored by Flight Centre and Virgin Australia, and the fund would target an 8 per cent distribution yield.
The South Brisbane block is one of the area’s best prime-grade office towers, and is trading for a gross price of $255m and a net price of $214.8m once adjustments are taken into account.
The 27,765sq m complex is billed as Brisbane’s only prime-grade building with interconnected rail and 4300sq m convenience retail centre, including Woolworths, McDonald’s, Terry White.
It has a weighted average lease expiry of 8.4 years; Virgin’s expiry in 2030 is considered an opportunity to reset rents at a time when few new offices can be built due to soaring costs.
The block would be sold off before the 2032 Brisbane Olympics, so it benefited from the $116.8bn of infrastructure spending at a time when market vacancy is the tightest since 2011.
The office has panoramic river and CBD views, and is one of the top office submarkets in Australia. It has an average 2.8 per cent vacancy and more than 35 per cent net effective rent growth. There is a 7.8 per cent initial yield on a gross basis, which is attractive for the Grey Street sub-precinct.
The Hamburg-based group bought Southpoint from the Anthony John Group in 2014 in a $200m forward-funding deal underpinned by construction of travel company Flight Centre’s new global headquarters.