Broadway supersite to rise in Telstra $67m sale

The Lansdowne Hotel on City Rd, Chippendale.

Sydney-based Tricon Group has quietly assembled one of Sydney’s best supersites by picking up two properties in the inner suburb of Chippendale, including the high-profile live music venue, The Lansdowne Hotel, for about $90m.

An entity associated with the group, headed by Rino Criola and backed by property investors Ben Ingham and Campbell Duncan, bought the freehold of the much-loved pub late last year for close to $20m.

While the buy has been dubbed passive they have since installed the Julian Romero-owned The Happy Mexican, which is best known in Melbourne, to bring a Tex-Mex menu to The Lansdowne, which sits on the Broadway strip.

That deal, brokered by HTL Property’s Blake Edwards, Sam Handy and Andrew Jolliffe, was the first element of larger site play put together by Tricon. Mr Criola had held an interest in the pub property since 2016 and the sale process, which resulted in an exchange just before Christmas, allowed him to bring in new capital.

HTL Property’s Sam Handy, Andrew Jolliffe and Blake Edwards sold the hotel alongside IB Property’s Stef Ippolito after a competitive sale process.

In a separate deal, the group acquired the neighbouring telecommunications centre on the Broadway corridor, picking it up from Telstra for $67.6m.

The price the group paid for the six-level purpose-built phone exchange, that now operates as a data centre, showed an initial yield of 6.65 per cent.

It was partly driven by the chance to lock in the broader site but the contest for the property also showed the depth of investor interest in long-leased commercial assets with development potential.

CBRE’s Harry George, James Parry, Jason Edge and Ben Wicks handled the sale and leaseback campaign for 200 Broadway.

The buyer is yet to reveal its plans for the combined site but industry sources have insisted the two purchases are discrete and passive in nature.

The freehold Chippendale building carries a triple net, five-year lease to Telstra, providing income security. The property’s B4 Mixed Use zoning also allows for significant development, refurbishment, or conversion potential in the longer term.

The buildings are near the $3bn Silicon Valley-style Tech Central hub earmarked for the city’s Central Station precinct and the area is also near a major university catchment, which is positioned to benefit from the lift in international students and migration.

The data centre building has an estimated gross floor area of 8,852sq m, with a basement and lower ground floor car park, ground floor and three upper levels. It is on a 1,770sq m site which has the potential for build-to-rent, other residential uses, which Tricon has the capacity to undertake.

The Chippendale building is one of very few assets to trade at this price point in Sydney’s city fringe market this year, though more deals are starting to unfold.

CBRE said that despite broader market challenges such properties were generating interest.