Consortium set to buy Sydney office tower for $158m
A joint venture consortium of TFE Hotels, Singapore’s largest private property developer Far East Organization and investment firm iProsperity Group has entered into due diligence to buy the future hotel site at 59 Goulburn Street in the Sydney CBD for $158 million.
Singapore listed developer Roxy-Pacific is selling the 1949-square-metre site opposite World Square.
The group, which bought the site for $90 million from the Charter Hall Office Trust in 2014, is selling to recycle its capital, following repeated offers for the site.
The mixed-use development is stage-1 approved for a 29,489-square-metre, 38-level mixed-use development, including 407 hotel suites, 90 apartments – ranging from studios to three-bedroom units – and 3720 square metres of retail space.
But the consortium would also have the option of redeveloping the existing B-grade, 23-level office tower on the site into a new commercial tower.
Whether a hotel or office, the consortium stands to benefit greatly. Sydney has a shortage of hotel rooms and the city has the nation’s lowest office vacancy heading towards an all-time low of sub 3.5 per cent.
And while there have been new premium office spaces such as Barangaroo, there have also been many office occupants displaced by metro rail and residential developments. In particular, there are no new office projects in the midtown area, where Goulburn Street lies. The area has a 4.3 per cent vacancy, according to JLL and Colliers International who are handling the sale.
Until redevelopment commences, the consortium would be able to reap an annual net passing rent income of $8.43 million from the current tower, which is 98 per cent leased. About 63 per cent of the tenancy is anchored by government agencies.
It has a total net lettable of 18,867 square metres, with ground floor retail.
Colliers’ Vince Kernahan and James Girvan and JLL’s Ben Hunter, James Aroney and Sam Brewer brokered the deal. The team is assisted by JLL’s Mark Durran and Colliers’ James Barber and Gus Moors.
All agents and members of the consortium have declined to comment.
Consortium partner iProsperity has been increasingly active in the Sydney hotel space after acquiring 333 Kent Street from Chinese-backed Maville Group for eye-catching $88.88 million.
