Readers Digest building in Sydney's Surry Hills sold for more than $52m
Greg Shand’s Barana Group has bought the landmark Reader’s Digest Building in Sydney’s Surry Hills for $52,673,000.
On a prominent island site the building, at 26-32 Waterloo Road, will soon be fully occupied by Woolworths’ subsidiary Endeavour Drinks Group on an eight-year lease.
Barana bought the property from Argus Property Partners, which had acquired it in 2014 for $30 million.
The sale price reflects a yield of less than 6 per cent and will deliver a strong return for Argus’s investors.
“This is an astute purchase for Barana given the building’s location, strong tenancy profile and future potential,” said CBRE’s Scott Gray-Spencer, who brokered the deal through an off-market transaction.
“It also represents a great recycling of capital by Argus, who have added considerable value to the property by extending Endeavour Drinks Group’s lease over the entire building.”
The four-storey building has a total lettable area of 7055 square metres. The land area is 3965 square metres, encompassing the entire block bounded by Cooper Street, Waterloo Street, Adelaide Street and Adelaide Place.
“There has been an increasing trend for renovation and residential conversions in Surry Hills over the past decade, with the market having also benefited from tremendous growth in office rents over the past three years,” Mr Gray-Spencer said.
“The property represents one of the only large floor-plate buildings in the city fringe. This, coupled with the property’s character feel and its location close to the new light rail station on Devonshire Street, should mean that the trend in office rent growth for this property will continue.”
The property will be added to Barana’s $450 million portfolio of offices, hotels, retail assets and apartment developments in Australia.
Among them is the Novotel Hotel, overlooking St Kilda beach in Melbourne, where Barana has also explored the property’s potential for residential development.
The Barana portfolio also includes commercial property in London and Switzerland. Its main activities are syndication, asset management and property development.
The Surry Hills deal is the first in what is expected to be a flurry of deals in Sydney in coming weeks, with more than $1 billion of stock pouring in the market over the past month.
This week alone, two more towers hit the market. Among them is the prime positioned 299 Elizabeth Street on the edge of Hyde Park, which was acquired just three years ago by a Chinese group as a potential residential conversion play.
Also in the market is 160 Sussex Street, a renovated 15-storey B-grade commercial tower, held by Burcher Property Group.
