The Investa group has taken its second half-share in a prominent Sydney city centre office and retail development in as many months.
Late last year the Investa Commercial Property Fund acquired a 50 per cent stake in the Glasshouse Retail Centre and an adjoining office complex at 135 King Street, fronting the city’s Pitt Street Mall. Stockland, Australia’s largest diversified property group, retained its 50 per cent stake in both properties.
Now, the Investa Office Fund has paid $194m [£105m] for a half-stake in another Stockland asset, the Piccadilly Tower, at 133 Castlereagh Street. The 32-storey building contains a court complex and Grade A offices and is 93 per cent occupied with tenants paying between $350 and $690 [£189 and £372] per square metre. Included in the sale is a neighbouring Grade B office tower and twin-level shopping centre.
Both transactions are in line with Stockland’s strategy of reducing its ownership of commercial property and using the cash generated to team up with ‘”capital partners’” for other sections of its business, including its residential operations. Managing director, Mark Steinert, said the deal was a good example of how Stockland was utilising capital partnering to improve its risk-return profile.
Toby Phelps is manager of the Investa Office Fund. Commenting on his fund’s latest acquisition he said: “Piccadilly Tower is highly complementary to our existing Sydney portfolio in terms of location, income profile and rental price point. Value-add opportunities exist in the short-term through the lease-up of vacant space.”
The surrounding area has recently undergone significant improvement with the development of 161 Castlereagh Street, home to the Australia and New Zealand Banking Group and Freehills, one of Australia’s ‘big six’ law firms. “The Pitt Street Mall has also been upgraded and there are also longer term opportunities to make more of this strategic location,” he added.
The purchase of the Piccadilly Tower brings the value IOF’s Australian wholly- or partly-owned properties to approximately $1bn [£540m] in less than two years. And earlier this month Investa Office reported a half year net profit of $56m [£30m], up 4.3 per cent on the corresponding period last year.
John Schroder, chief executive of commercial property at Stockland, said he was looking forward to working closely with Investa to realise the full potential and value of the shared assets in the heart of Sydney. His company recently renewed its lease wth Stockland Trust, which will see the company continue its occupancy of nine floors of Piccadilly tower for the next 10 years.
The King Street property Investa Commercial Property Fund took a stake in last December has 24 floors of Grade A offices as well as the Glasshouse Shopping Centre, a three-level retail centre in the heart of Pitt Street Mall. The 24-year-old building recently completed a mechanical plant upgrade and is in the middle of a rolling office floor refurbishment.
