City of Sydney makes heritage office play as CorVal exits for $110m

The Clover Moore-led council will hold the property long term but the sale is a windfall for the vendor, an unlisted trust run by a company associated with billionaire Andrew Roberts.

The property in Huntley Street was bought from the RF CorVal Woolstores Trust, which acquired the three former woolstores in 2014 for $51.75m when the properties were in the final stages of being converted to offices.

Mr Roberts, who once headed Multiplex, is a backer of the RF CorVal business.

CorVal leased up the offices and said it had made an “equity multiple” of 3.1 times over the trust’s investment term.

The City of Sydney could also benefit from the gentrification of the area with more residential towers to come and office developments on the drawing board in the suburb in the Green Square precinct.

The City already owns another historic office building, at 343 George Street, in the CBD, which it picked up from Abacus for $78m in 2010. The council this year announced an upgrade for that heritage-listed building, which was known as Barrack House.

The deal on The Woolstores in Alexandria was done off market and reflected a 4.9 per cent yield and a weighted lease expiry of 3.3 years.

The City of Sydney Council has purchased The Woolstores in Alexandria off market for $110m from CorVal. Picture: Supplied by Cushman & Wakefield

The Woolstores is just 15 minutes from the Sydney CBD and consists of three restored heritage-listed wool sheds, reinvented as office spaces and major tenants include Living Edge, Swarovski, Thyssenkrupp Elevators.

A City of Sydney spokesperson said the acquisition had been made as part of the council’s broader investment strategy and was part of its long-term financial plan. “The income from this type of investment helps to fund the City’s services and capital works projects, easing the burden on ratepayers,” he said.

The deal was brokered by Steven Kearney and Mark Hansen of Cushman & Wakefield and Michael Crombie and Adam Woodward of Colliers International.

Mr Kearney said that The Woolstores was a high-quality commercial office investment with a 5.5 star NABERS Energy rating that aligns with the City’s long term financial plan.

“The Woolstores has thoughtfully been constructed with a wide range of recycled heritage materials incorporated into a contemporary design providing good levels of character,” he said.

Mr Crombie said the estate had always been successfully leased and City of Sydney were quick to seize the opportunity off market.

RF CorVal head of transactions Oliver Picone said the deal was a “great result” for the trust investors.

“We acquired the property from the original developer as it neared completion, basing our strategy on the unique nature of the heritage office space and Alexandria being an up-and-coming market with the potential for growth,” he said.

This article was first published on www.theaustralian.com.au.