Perth investors double money on B-grade office block with $60 million sale
Perth-based investors Property Bank Australia and Security Capital Australia have more than doubled their money on an office asset in Sydney’s north shore after it sold for $60 million.
The co-owners bought 154 Pacific Highway, St Leonards, for $25.5 million in 2012 from Charter Hall.
The 10-storey tower, which sold on a 5.86-per-cent yield, has the potential to be redeveloped into a 15-storey tower with 159 apartments and 1500 square metres of retail space, according to a scheme prepared by PBD Architects.
The plans were drawn up in light of the state government’s proposed rezoning framework – including increased building heights and density with a focus on mixed-use development – on the Pacific Highway corridor at St Leonards, which is currently zoned for commercial core use.
The Pacific Highway property is within the corridor earmarked for future mixed-use rezoning. Photo: Commercial Real Estate
But for now, the new owners, who are domestic private investors, plan on keeping the building as it is, Knight Frank selling agent Tyler Talbot told Commercial Real Estate.
The fully-let B-grade asset attracted both local and offshore investors, who put in 15 bids during the campaign.
“154 Pacific Highway is strategically situated on a large corner site of 3080 square metres and is currently 100 per cent let, with tenants including Ramsay Health Care and Hyundai Merchant Marine,” Mr Talbot said.
He added that the property was “significantly under-rented”, meaning there is an opportunity for future rental growth.
Vacancy rates in the Crows Nest and St Leonards area fell to 11.1 per cent from 12.6 per cent in the six months to January 2018, Property Council of Australia data shows.
Co-agent Bevan Kenny, from CI, said that pocket of the north shore is set to be transformed.
“The surrounding area will be further enhanced as St Leonards continues to evolve into an exciting social, cultural, residential and commercial hub,” he said.
“The property falls within an area identified as a potential ‘high-density mixed used corridor’, (and) offers long-term redevelopment potential through rezoning to B4 Mixed Use (subject to council approval).”
The tower is one of a string of similar office blocks on the lower north shore that the Perth-based co-owners have offloaded in the past year. These include the North Sydney sales of 75 Miller Street, which sold for nearly $52 million and 8 West Street, which fetched $60 million.
Knight Frank’s Dominic Ong and CI’s Chris Veitch also brokered the sale for 154 Pacific Highway, while Damien Holliday and Alex Henderson from commercial buyers agency Prosper Group acted for the buyer.
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