Propertylink Group has sold a North Sydney office tower for $71 million to a Hong Kong investor – nearly doubling its value in two years.
The property at 80 Mount Street belongs to a fund co-owned by Goldman Sachs, which has a 75 per cent stake, and Propertylink which holds a 25 per cent interest.
The fund purchased the property in August 2016 as part of the Denison Portfolio acquisition, which included nine industrial, office and retail assets worth $142 million.
The 14-storey building accounted for about $36.7 million of that portfolio.
It has now sold on a sharp initial yield of 4.32 per cent, despite still having a 6.3-per-cent vacancy.
The sale price represents a 29 per cent premium to its current book value.
The buyer is a Hong Kong family which has been investing in Sydney for some time, Knight Frank selling agent Dominic Ong said.
Other prospective buyers included local institutions and private investors, as well as offshore buyers, which dominated 60 per cent of interest. The foreign investors came from Hong Kong, Singapore, mainland China and Malaysia.
Mr Ong said the listing received 250 inquiries and nearly 20 bids in the first round of offers.
“It has been very, very well received,” he said, attributing the demand to “location, location, location”.
“It’s a very secure multi-tenant (investment), with a great location and there is rental growth potential as well, so it’s all very appealing.”
The annual rental income of the B-grade office tower is about $3.8 million – a result which is thanks to a major building and leasing upgrade, Propertylink’s chief investment officer Peter McDonald said.
“Since the acquisition of 80 Mount Street, we have deployed a targeted capital expenditure program to refurbish and upgrade the building.
“Most significantly, however, we have undertaken extensive leasing activity across 55 per cent of the building area, driving occupancy from 75 per cent to 92 per cent over the last two years.”
Propertylink’s managing director and chief executive officer Stuart Dawes said Australian real estate was sought after by “existing and new global institutional investors”.
The tower has 34 tenants including A2 Milk and Tract Consulting and occupies a 652-square-metre site with about 6204 square metres of net lettable area.
Mr Ong sold the building with Tyler Talbot, along with CBRE’s James Parry, Kenny Duncanson and Sharon Yang.
The property is due to settle in November 2018.