Strong Sydney market prompts $115m Kent St sale
The strength of Sydney’s office market has spurred Credit Suisse to put a major tower occupied by Central Queensland University on the block in a move likely to reap close to $115 million.
The sale comes as investors vie for buildings across Sydney, with more than $1.3 billion worth of towers in play and international groups setting a fierce pace for assets.
Credit Suisse’s asset management arm has tapped Inc RE to market the 11-storey office tower, which is fully leased to the university with the building’s 14.5-year weighted average lease expiry, or WALE, likely to appeal to international groups.
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Comprising 10,461sqm of A-grade office space, 400 Kent St sits on a 1175sq m site in the tightly held western precinct of the Sydney CBD. Inc RE’s Mark Hansen and Richard Butler are steering the expressions of interest campaign.
The building was refurbished in 2003 and Credit Suisse upgraded it after picking it up for $58 million from two Charter Hall funds in 2014.
Hansen says Sydney is the absolute focus for offshore investors and the significant amount of stock brought to the market over the past 12 months has left many underbidders still hungry for assets.
Assets with a WALE over 10 years are few and far between across Australia and are exceptionally rare in Sydney CBD
He says the building’s passing rent will allow an astute investor to drive significant value at the next review.
“We expect this property to attract the interest of a number of investors seeking not just income security but also significant upside providing a very healthy total return,” Hansen says.
Butler says that in the wake of global economic volatility, secure investment opportunities in proven locations such as Sydney will remain hotly contested.
“Assets with a WALE over 10 years are few and far between across Australia and are exceptionally rare in Sydney CBD, only a handful have historically been afforded for sale,” Butler says.
He adds that Sydney’s western corridor is being rejuvenated with major residential, serviced office and commercial plays under way. “This also leads to the potential for longer-term redevelopment potential outside of the existing commercial building,” he says.
This article originally appeared on www.theaustralian.com.au/property.
