Telstra has $300m hopes for Pitt Street Exchange Building
Telstra is stepping up its $2bn property and asset selldown and has tapped real estate agency Knight Frank to sell the Pitt Telephone Exchange Building in the hopes of reaping about $300 million.
The offer will be one of the largest in Sydney’s CBD in the wake of the pandemic crisis and Telstra is banking on its blue-chip covenant and the presence of a data centre to bring investors to the table.
The property in Pitt Street, which has been used as a broadcast operations centre, is likely to be offered with an attractive 10-year leaseback term once details are hammered out.
Charter Keck Cramer is providing transaction management services and Paul Roberts, Jonathan Vaughan and Graeme Russell, of Knight Frank, will handle the campaign.
The site will be marketed for both its prime location and long-term income stream and will likely carry a triple net lease.
The ageing 15-level building was completed in 1971 and spans about 24,000sqm.
But the real attraction for a buyer is the ability to acquire the 1500sq m site and work up redevelopment plans as nearby Martin Place will be transformed by the new metro, and associated development, over the next decade.
The building houses few staff but is essential to Telstra’s operations so is less affected by the impact of work-from-home practices than other buildings.
Telstra unveiled its T22 strategy in 2018, including the goal of monetising up to $2bn of assets to strengthen its balance sheet.
“As part of our T22 strategy, we have an ambition to monetise up to $2bn worth of assets and we continue to look at how we can unlock value in our property portfolio. We have commenced discussion on the future of the Pitt Street exchange, however, no decisions have been made,” a spokesman told The Australian.
Property group Charter Hall previously was rumoured to have held an option over the asset but this was never confirmed.
The property company has a close relationship with the telco. Its satellite trust that specialises in long-leased property last year acquired a near half stake in a $1.4bn property portfolio from Telstra.
Telstra is also selling a $400 million data centre property in Melbourne via investment bank UBS as investors seek to back the booming area. In that case it is selling off a 3.2ha site in the southeastern suburb of Clayton that has 10 buildings, including two data centres.
This article originally appeared on www.theaustralian.com.au/property.
