Charlotte Street Sale Default Slashes AOF Property Value by $11M
Australian Unity Office Fund’s planned $63.5 million sale of 150 Charlotte Street, Brisbane, has hit a snag with the purchaser defaulting on settlement, prompting a sharp valuation downgrade and withdrawal of distribution guidance.
- Purchaser defaults on $63.5 million Charlotte Street settlement
- Independent valuation slashes property value to $52.5 million
- Revised offer of $54.5 million received, settlement delayed to March 2026
- Distribution guidance withdrawn amid sale uncertainty
- Fund holds $26 million cash including $4.8 million deposit
Background to the Sale
Australian Unity Office Fund (AOF) entered into a contract in April 2024 to sell its Brisbane office property at 150 Charlotte Street for a net price of $61.5 million, with settlement initially scheduled for April 2025. Following a purchaser request, settlement was deferred to August 2025 with an increased sale price of $63.5 million.
Purchaser Default and Contract Uncertainty
Despite attempts to secure settlement, the purchaser failed to complete payment by the August 22 deadline, triggering a formal notice of default. The contract allows the purchaser until September 8 to remedy the default, after which AOF may terminate the agreement and retain the $4.8375 million deposit. This unexpected default has cast significant doubt on the sale proceeding under the original terms.
Valuation Impact and Revised Offer
In light of the default, AOF commissioned an independent valuation which valued the property at $52.5 million, a steep decline from the contracted price. The valuation reflects the building’s 96% vacancy, highlighting challenges in the Brisbane office market. Subsequently, the purchaser submitted a revised offer of $54.5 million, inclusive of the deposit, with settlement proposed for March 2026. The AOF board is currently reviewing this offer.
Financial and Distribution Implications
The sale uncertainty has led AOF to withdraw its previously issued distribution guidance, which had been predicated on the successful August 2025 settlement. As of June 30, 2025, the fund held approximately $26 million in cash and equivalents, including the deposit from the Charlotte Street sale. Investors will be watching closely as AOF prepares to release its full-year results on August 28, which will provide further clarity on the financial impact.
Looking Ahead
The unfolding situation at Charlotte Street underscores the risks inherent in property transactions amid a challenging office market environment. The purchaser’s next moves, the board’s response to the revised offer, and the final financial results will be critical in shaping AOF’s near-term outlook and investor confidence.
Bottom Line?
Charlotte Street’s sale saga is far from over, with the fund’s next steps poised to influence its financial trajectory and investor returns.
Questions in the middle?
- Will the purchaser remedy the default or will AOF terminate the contract?
- How will the revised offer impact AOF’s valuation and distribution strategy?
- What does the high vacancy rate at Charlotte Street signal for AOF’s broader portfolio?
