Information Memorandum

Parliament Square

INTRODUCTION

01

The CBRE Capital Markets Office & Hotels teams as exclusive agents are delighted to offer Tasmania’s pre-eminent mixed-use investment for sale by International Expressions of Interest — Parliament Square, Hobart.

Commanding a prominent position within Tasmania’s capital city, Parliament Square sits atop of Salamanca Place, centrally positioned within Hobart’s cultural and Parliamentary heart. Offering views across Sullivan’s Cove and Franklin Wharf, the project is now regarded as one of the finest architectural examples of combining old and new.

Parliament Square features a modern, FJMT designed office tower and podium of 16,283 sqm* leased long term to the Tasmanian State Government, together with a 152-room luxury hotel to be known as ‘The Tasman’ and to be operated by the Marriott International, as part of their Luxury Collection. In addition to the office tower/podium and hotel, there are, four retail tenancies and a 180-bay basement carpark.

Offering a remaining lease term of 16 years (office) and backed by Aa2 rated State Government income, we encourage your serious consideration of Parliament Square.

OFFICE

Mark Granter
Executive Managing Director
M +61 439 035 433 | mark.granter@cbre.com.au

Kiran Pillai
Senior Director
M +61 438 381 172 | kiran.pillai@cbre.com.au

Mark Coster
Senior Managing Director
M +61 439 033 601 | mark.coster@cbre.com.au

HOTELS

Michael Simpson
Managing Director
M +61 431 649 724
michael.simpson@cbrehotels.com

Scott Callow
Senior Director
M +61 418 153 606 | scott.callow@cbre.com.au

INTERNATIONAL

Stuart McCann
Head of International Capital – Pacific & SEA
M +65 9824 5834 | stuart.mccann@cbre.com
Salesperson Reg No: R059301C
Agency License No: L3002163I

INTRODUCTION

01

EXECUTIVE SUMMARY

02

Property
Components

01. The Salamanca Building
Completion Date Late 2017
NLA 15,138 sqm*
Typical Floor Areas 930 sqm* to 1,900 sqm*
Lease Term 20 years from Oct 2017
plus 5 x 5 year options
Rent Review 3.75% p.a.
Net Passing Rent $8,345,716*
Major Tenant Tasmanian State Government
04. Basement Car Park
Completion Date March 2021
Total Rent $393,408*
Lease Term 16.6 years from March 2021
plus 5 x 5 year options
Rent Review 3.75% p.a.
Total Spaces 152 (office only)
Major Tenant Tasmanian State Government
02. Podium Office Building
Completion Date 2021
NLA 1,145 sqm*
Typical Floor Areas 600 sqm* & 550 sqm*
Lease Term 16 years from October 2021
plus 5x5 year options
Rent Review 3.75% p.a.
Total Rent $608,433* pa
Major Tenant Tasmanian State Government
05. Retail Tenancies
Completion Date October 2021 (TBC)
Total Rent $587,000 net p.a.*
Total Area 631sqm*
Areas 65 sqm* to 250 sqm*
*Approx
*Includes income support over existing vacancy
03. The Tasman Hotel
Completion Date Late 2021
Total Rooms 152
Grade 5 Star
Management Agreement Term 15 years
Luxury Facilities Function Rooms, Signature Bar & Dining.
Major Tenant

EXECUTIVE SUMMARY

02

Ministerial office suite

Atrium - link to Parliament

Salamanca Building Lobby

Parliamentary committee room 1

16 year lease to Tasmanian State Government with fixed growth throughout.

The office component of Parliament Square is leased to the Tasmanian State Government until 2037. Offering fixed reviews of 3.75% per annum until expiry, Parliament Square offers a secure and long-term cash flow like few others. Long-term retention of the tenant is also high given the atrium infrastructure connecting Parliament Square with Tasmania’s Parliament House.

INVESTMENT HIGHLIGHTS

03

 

Salamanca Building

Backed by strong economic fundamentals

Commentary by Saul Eslake
- Corinna Economic Advisory

Tasmania’s recent economic performance

Tasmania’s economic performance improved significantly in the five years prior to the onset of the Covid-19 pandemic in March last year, compared with the preceding five years.

Tasmania’s real gross state product, which is the broadest available measure of the output of goods and services within a state’s borders, increased at an average annual rate of 2.1% over the five years to 2018-19, almost double the 1.2% average annual rate recorded over the preceding five years.

Tasmania’s economy has also demonstrated considerable resilience since the onset of Covid-19.

Growth in real gross product per capital, Tasmania and mainland Australia

Source: ABS, Australian National Accounts: State Accounts, 2019-20; Corinna Economic Advisory.

Tasmanian ‘state final demand’ – the sum of household, business and government spending – in the March quarter was 2.1% above its pre-recession peak and above the national average of 1.4%. Employment in Tasmania as of May 2021 was still 0.6% below its pre-pandemic peak, somewhat behind the corresponding national figure, which was 1.0% above its pre-pandemic high – largely because of Tasmania’s relatively greater dependence on tourism, which is still being significantly affected by Covid-related restrictions.

State final demand, Tasmania and Australia

Note: ‘State final demand’ is the sum of household, business and government expenditure. It is conceptually equal to gross state product excluding net interstate and overseas trade and changes in inventories.
Source: ABS, Australian National Accounts: National Income, Expenditure and Product, March quarter 2021; Corinna Economic Advisory.

The State government has managed Tasmania’s finances competently and prudently – with the result that Tasmania has the lowest burden of state taxes of any state, and the second-lowest level of net debt (relative to the size of its economy) of any state.

Tasmania’s tourism ‘brand’

Tasmania had become something of a ‘tourist Mecca’ in the years immediately prior to the onset of Covid-19, with total visitor numbers topping 1 million for the first time in 2014 and exceeding 1.3 million in each of 2017, 2018 and 2019, and visitor spending exceeding $2.5 billion in both 2018-19 and 2019-20 (despite the impact of Covid-19 on the last quarter of 2019-20).

Visitors to Tasmania

Note: 2020 is year ended 31 March. Source: Tourism Tasmania, Visitor Statistics, March 2021.

Tasmania’s outlook for the next 10-20 years

Tasmania’s economic performance over the past five years has been much stronger than over the previous two-and-a-half decades. Moreover, there are good reasons to expect that this performance can be sustained in the years immediately ahead, given the positive interactions which this economic performance is now having with Tasmania’s demographic profile, and the continuity of policy settings which seems likely to flow from the outcome of the most recent state election.

A precinct
of global importance

Occupying the best position on Hobart’s famed waterfront, the precinct is the city’s new civic heart and seat of power. Amassing a total site area of 7,738 sqm*, it blends seamlessly with one of Australia’s most famous heritage Parliamentary Buildings and creates a place of international significance. Highly considered and obsessively executed, Parliament Square was born from a global vision and an ambition to redefine what a modern civic precinct can be.

Architecturally exceptional

Inspired and designed by FJMT architects – the creative minds behind other national icons including 200 George Street, Darling Quarter and ANZ Tower, Sydney. The project rests easy in its surrounds and seamlessly connects with the Tasmanian Parliamentary building. It sets a new standard for commercial buildings in the state. FJMT comments “The concept explores the expression of a contemporary Tasmanian Government building and sets out to create an inclusive sense of identity for staff and visitors. The organic and welcoming design language incorporates references to the enduring beauty of the Tasmanian landscape” Source: fjmtstudio.com/projects.

fjmstudio

https://fjmtstudio.com/

francis-jones morehen thorp (fjmtstudio) is one of Australia’s foremost and awarded architectural practices and is dedicated to design excellence, innovation and the enhancement of the public domain.

The multi-disciplinary fjmt design studio explores the evolution of architectural form by synthesising place and programme through an elaboration of the tectonic. fjmt’s work focuses on the spatial and organic interconnection of built form and site to embody shared values and aspirations.

Design Statement

Parliament Square is located directly behind the Tasmanian State Parliament building on the rising topography of Sullivanʼs Cove.

Bounded by Murray and Davey Streets, and Salamanca Place, the site houses significant heritage buildings from the 1840ʼs through to the inter-war period of the 1930ʼs. The early buildings housed state government functions including St Maryʼs hospital, a medical facility, Government Printing Office, Tasmanian Hydro Electric Commission and other parliamentary functions.
Over time, low quality and unsympathetic additions to the rear of sandstone and brick buildings congested the site and limited public access and enjoyment.

The Parliament Square project removes invasive structures and opens the heart of the site to new public domain linking Salamanca Place to Murray Street.

fjmt have created a central public space that works as a platform placed on the side of the hill, affording outlook over Sullivanʼs Cove and offering a level space for community gathering and events. The central open space is supported by a series of intimate spaces that offer opportunity for a variety of outdoor experiences and facilities whilst creating a harmonious and unified precinct with a strong sense of identity and social inclusion.

The proposed landscape design is highly responsive to the existing context incorporating the built forms of the heritage buildings and preserving the relationship to the harbour and adjacent open green spaces. A through-site link extends from St Davidʼs Park and Salamanca Place to Murray Street through the distinctive 12 Murray Street arcade.

A carefully scaled and detailed new workplace building is complete and links directly to Parliament House through a glazed connection. Striking V-form columns mark the double height entry to the new office building and form an iconic link to the public space from Salamanca Place.

The development maintains a contemporary urban environment with active edges interfacing with the Hotel and Salamanca Office Building and presents opportunities for pedestrians to experience places to move through, move to, or simply enjoy the site. Key vantage points to observe views across Sullivans Cove and Derwent River will be retained and augmented by the new retail facilities.

Strong visual connections across the site are enhanced by strategically placed and carefully detailed landscape elements drawing persons into the site and guiding the eye. Fixed seating will identify specific spaces for users to sit around the site.
Raised edges and passive seating walls will provide moments for people to sit for shorter periods of time.

The new retail facilities, hotel outdoors seating, show kitchen in the Red Brick Building will contribute to activation at the edges of the plaza. A kiosk structure at the eastern edge will take advantage of the views of Sullivans Cove and will extend the activated perimeter of the plaza. The associated outdoor seating and landscaping will enliven the plaza space and provide increased activity

Joseph Pang Design Consultants

Design Statement

“Hobart city is the inspiration of the interior design of the Tasman……the location of the city of Hobart, the history of Hobart, and the architecture of Hobart.

The maritime location of Hobart with the shimmering deep blue sea, and the mount Wellington in the backdrop, is simply inspiring.

The culture of Hobart is built upon the deep Aboriginal history and the stories from settlers, as well as the experience of the modern city dwellers.

The hotel being built on a site with history encapsulated in the architecture, reflecting the Victorian, Edwardian, as well as Art Deco heritage, the new extension of the hotel, clad in steel and glass, a modern design belonging in the 21st century.

The Tasman Hobart is a celebration of the past through modern expression; nature against urban; rawness against bespoke; texture against pattern, juxtaposed as well as eclectic mix; multi-hued against monochromatic, and this paradox continues as a thread stitching together all the inspirations.”

– Joseph Pang

JPDC ( Joseph Pang Design Consultants ) is a Sydney based interior design studio established in 2004, specialising in five star hotel interiors including business and convention hotels, resort hotels and boutique hotels, with projects located in Australia and the Asia Pacific region.

Joseph Pang, founder of JPDC, has designed some landmark Australia based projects including the Westin Sydney at No. 1 Martin place 1997, The Sydney Hilton main refurbishment 2001, Hayman Resort refurbishment 2001, Hotel Intercontinental Sydney refurbishment 2003.

Tasmania’s New Luxury Tourism Icon

The Tasman Hotel by Marriott is set to become one of Australia’s most renowned luxury hotels, with its unique blend of modern and historic Hobart architecture. The signature hotel fitout by Joseph Pang will ensure that Marriott’s legendary service is complemented by the finest contemporary refined luxury.

The Tasman - A luxury Marriott Group Hotel

Tasmanian Hotel Market Commentary

04

Hobart
Tourism

Hobart offers a contrasting blend of heritage, scenery and culture, with world class activities and attractions. Located at the entrance to the Derwent River and at the foothills of Mt Wellington, Hobart combines heritage charm with a modern lifestyle. Hobart is Tasmania’s capital city and the second oldest capital in Australia, after Sydney.

Growth in Tasmanian tourism has been enhanced by the opening of MONA (the Museum of Old and New Art) in 2011. This world class art, culture, food and tourism facility has been the catalyst for a new and refreshed Tasmanian tourism economy.

Strong Fundamentals

Detailed in the following table and graphs is an analysis of the performance of the Hobart accommodation market, which has been sourced from STR (Smith Travel Research)

Historic Performance 2015- 2019

Average Daily Rates have grown from $168 to $183 between 2016 and 2019 recognising the rising demand in leisure and tourism, before the impacts of Covid-19 caused ADR to fall to $162.92 in 2020 with most of this rate fall being attributable to the Government’s bulk booking of room nights for quarantine hotels at a discount to usual room rate levels.

There was has been a considerable increase in tourism activity in Tasmania over the past 10 years which has been the driving force behind the RevPAR growth experienced in the market between 2016 and 2019.

Demonstrating the robust and elastic demand for Tasmanian hotel room nights, RevPAR for the months of April and May have already rebounded to 2019 levels compared to those previous corresponding periods.

Future Performance:

The Hobart market is experiencing a sharp rebound in tourism demand and market RevPAR improvement following the impacts of Covid-19. Given Hobart’s outstanding fundamentals, its dominant source market being Australian residents, and the inability for residents to travel outside of Australia for the foreseeable future, the Hobart market is primed to take advantage of the high yielding Australian leisure travellers seeking the unique cultural, dining and lifestyle experiences that Tasmania has to offer.

MONA

Location

05

Prime Location

Parliament Square occupies arguably the best CBD location in Hobart, overlooking Franklin Wharf and Sullivans Cove. It is also regarded as Hobarts premier food, beverage, and entertainment precinct.

The property is directly connected to Parliament House and is located opposite the Supreme Court and ministerial offices of Tasmania.

This location is famous for the popular adjoining Salamanca Markets, which are held every weekend. They are the most visited tourist attraction in Tasmania and one of the largest outdoor markets in Australia.

Outline indicative only

PROPERTY OVERVIEW & BUILDING DESCRIPTIONS

06

Property & Building Description

Parliament Square – An Overview

Parliament Square represents a substantial mixed use office, hotel and retail development/precinct, situated on a 7,738 sqm* site. The site has frontages to Davey Street, Salamanca Place and Murray Street, with spectacular views overlooking the Hobart harbour and water front.

A collaboration between Australia’s leading design and construction specialists have delivered what many are calling one of the finest examples of modern architecture country wide. No expense has been spared in delivering this new Tasmanian landmark.

Developer

The consultants team includes:

The property has been developed as an integrated mixed-use precinct (principally two stages) and is centred around an internal garden courtyard, encouraging activation and symbiotic usage.

Stage 1

The main Salamanca Office building of some 15,138 sqm*, which was completed in late 2017. This building is directly linked to the Tasmanian Parliament House. The Salamanca building includes 2 lower ground levels, ground level entry foyer and 8 levels of office space with an atrium that connects to the adjoining Parliament House. The upper floors have outstanding views to the Hobart CBD, Mount Wellington, and Sullivan’s Cove. The Salamanca building has been designed to meet 4.5-star NABERS Energy rating and 5 Star Green Star.
Stage 2

The Podium Office building 1,150 sqm (approx.), 180-bay basement carpark, 4 retail tenancies and the 152-room Tasman Hotel, branded by Marriott as a Luxury Collection Hotel. Stage 2 is anticipated to be fully completed in late 2021.

Net lettable area summary:

*approx.

Government departments
occupying the Salamanca Building

Hobart is recognised for its historic waterfront precinct Salamanca Place and The Tasman Hotel provides the perfect connection to Salamanca Place, the Hobart CBD and the Sullivans Cove waterfront.

To be operated and managed under Marriott International’s Luxury Collection brand, The Tasman comprises several heritage buildings with a new tower above, offering a new standard of modern luxury accommodation to the Tasmanian market.
The heritage buildings which are being retained are 34 Davey Street, 34 West Davey Street, 36 Davey Street, and 12 Murray Street. These buildings have been fully restored and provide a range of luxury accommodation and room types to suit all discerning travellers. Similar to some of the world’s other great hotels like Peninsula Hong Kong or Hotel de Paris Monaco, the Tasman’s art deco heritage rooms are juxtaposed with a collection of ultra-modern rooms and suites perched above the heritage buildings, providing picturesque views across the River Derwent.

There are 152 rooms and suites, with a generous average room size of 34.4 sqm*. There is a diversity of room types, enabling the operator to effectively segment and yield manage for optimal profitability. The rooms include exclusive local art pieces, Frette 400 thread count linen with cashmere throws, luxurious bathrooms with rainfall showers, state-of-the-art 55” smart TVs and many rooms have fireplaces.

The room types include:

King Rooms 107
Zipper King Rooms 13
Accessible Zipper King 6
Accessible King 1
Accessible Double Double 1
Double Double 17
King Suite – One Bedroom 7
TOTAL 152

Modern travellers seeking a customised Tasmanian experience will enjoy the 120 seat signature Italian restaurant, in collaboration with celebrity chef Massimo Mele. Other food and beverage facilities include Tasmania’s finest cocktail & whiskey bar, the Deco Lounge and an exclusive private dining room.

Business and leisure guests will be able to take full advantage of the modern fitness facilities, which are open 24 hours a day.

*approx

The Tasman Hotel Entrance

Artist Impression

Heritage Bathroom

Heritage King Room

Tenant Profiles

07

Tasmanian
Government

Office

The office component at Parliament Square is 100% occupied by the Tasmanian State Government until late 2037. In February of this year, Moody’s affirmed the State’s Aa2 credit rating which regards obligations judged to be of high quality and very low credit risk. Similarly based on the April 2021 CommSec report, Tasmania leads the way based on recent economic performance.

As previously stated, the Salamanca building is physically attached via the atrium link to Parliament House. Part of the Salamanca building is occupied by the Parliament of Tasmania and other government departments included the Department of Education, Department of State Growth and Department of Treasury and Finance.

Hotel

Listed on the NASDAQ and with a market capitalisation of approximately US$50bn, Marriott International is the world’s largest hotel company, with 750,000 employees and 7,600 hotels across 134 countries. In Asia-Pacific, Marriott operates over 820 properties in 24 countries.

Marriott is one of the global leaders in luxury accommodation, with a suite of some of the world’s finest and most-renowned hotel brands including Ritz Carlton, St Regis, and Luxury Collection.

Marriott’s world-leading hotel loyalty program Bonvoy has over 150 million members, providing a ready source of room night demand for owners.

With 113 hotels in 35 countries, each of the Luxury Collection branded hotels and resorts is a living cultural expression of the destinations in which they are situated. For the global explorer, The Luxury Collection offers a gateway to the world’s most exciting and desirable destinations.

Salamanca Building

FINANCIALS

08

Salamanca Building & Podium Office – Major Tenant Lease Summary

The Salamanca Building, Podium Office Building and Car Park are securely leased to the State Government of Tasmania under the following terms:

Lessee: Tasmanian State Government
Tenancy Area (NLA): 16,287 sqm (inc. atrium)
Premises: Salamanca Building, Podium Office Building & Car Park
Lease Term (years): 20 years
Option Term(s): 5 x 5 years
Lease Commencement Date: Salamanca Building -
25 October 2017 (executed)
Podium Building – 31 October 2021 (assumed execution)
Basement Car Park – 31 March 2021 (assumed execution)
Rent Reviews: 3.75% per annum
Outgoings: The Lessee will pay actual outgoings on a pro-rata basis. In addition, the Lessee will pay 25% of the Public Open Space Outgoings.

The following table provides a summary of the financial position of Parliament Square, Hobart. A detailed Financial Summary Pack is available within the Electronic Data Room.

Salamanca Building & Podium Office – Income Summary

Income Assessment**
Passing Rent $ p.a.
Office 8,954,149
Retail (includes income support across vacancies) 587,000
Car Parking 393,408
Storage 13,200
Outgoings Recoveries 2,594,146
Gross Income 12,541,902
Less Total Outgoings 2,751,646
Net Passing Income (fully leased) 9,790,257

The Tasman Hotel

The Vendor has procured a 10-year forecast profit and loss statement from independent experts Axsia Group and based on this forecast the Year 3 stabilized net operating income is $7,485,000 pa approx.

A full copy of this 10 year forecast is available via the Data Room, subject to signing the NDA.

**Forecasts as at 31 October 2021.
Note - all figures are approximate and subject to change.

SALE PROCESS &
CBRE CONTACT DETAILS

09

Parliament Square is being offered for sale via International Expressions of Interest, closing Wednesday 25th August through the selling agents CBRE (contact details below).

Expressions of Interest should also include the following information, as a minimum:

  • Name and details of the purchasing entity.
  • Source of capital.
  • Offer Price and deposit.
  • Capacity to complete the transaction, including any requirements to raise debt or equity.
  • Details of any conditions, for example FIRB.
  • Timetable for Due Diligence, sale contract execution and settlement.

Please note that the Vendor has the right to accept any offer or vary the process at any time.

OFFICE

Mark Granter | Executive Managing Director
Investor ServicesI Client Care
M +61 439 035 433 | mark.granter@cbre.com.au

Mark Coster | Senior Managing Director
Head of Capital Markets - Pacific
M +61 439 033 601 | mark.coster@cbre.com.au

Kiran Pillai | Senior Director
Capital Markets Office
M +61 438 381 172 | kiran.pillai@cbre.com.au

Stuart McCann | Head of International Capital – Pacific and SEA
Capital Markets and Capital Advisors
M +65 9824 5834 | stuart.mccann@cbre.com
Salesperson Reg No: R059301C
Agency License No: L3002163I

HOTEL

Michael Simpson | Managing Director
Capital Markets, Hotels
M +61 431 649 724 | michael.simpson@cbrehotels.com

Scott Callow | Senior Director
Capital Markets, Hotels
M +61 418 153 606 | scott.callow@cbre.com.au

CBRE(V) Pty Ltd - L34, 8 Exhibition Street, Melbourne 3000

DISCLAIMER

*Approximately.

This Information Memorandum has been prepared by CBRE (V) Pty Ltd (ABN 15 083 694 357). This document does not constitute an offer or contract of sale. It is intended only as a guide and an aid to further investigation by potential investors. Potential investors accept this document on the condition that they will make their own enquiries and obtain their own independent advice in order to verify the accuracy of the information presented in this document. The content of this document has been derived, in part, from sources other than CBRE and may be based on assumptions. In passing this information on, CBRE and the Vendor do not warrant that such information or assumptions are accurate or correct. Parties should seek their own independent verifications and advice on such information.

To the extent that this document includes any statement as to a future matter, that statement is provided as an estimate and/or opinion based upon the information known to CBRE at the date of preparing this document and assumptions which may be correct. CBRE does not warrant that such statements are or will be accurate or correct.

CBRE provide this document on the condition that, subject to any statutory limitation on its ability to do so, CBRE disclaims liability under any cause of action including negligence for any loss arising from reliance upon this document.

This confidential document is for the sole use of persons directly provided with it by CBRE and are not to be supplied to any other person without the prior written consent of CBRE. Use by, or reliance upon this document by any other person is not authorised by CBRE and without limitation to the above disclaimers, CBRE are not liable for any loss arising form such unauthorised use or reliance.