Wingate bets on Sydney parking squeeze after buying The Rocks car park
Wingate expects to benefit from a squeeze on parking spaces in the Sydney CBD over the next few years, as new office towers come online, after outlaying $52 million for an eight-level car park at The Rocks.
Situated below a 40‐storey residential, office and retail building at 109‐111 Harrington Street, Wingate acquired the 589-bay Quay West Car Park leasehold from ASX-listed Mirvac, which put it up for sale in October.
Sixty-seven years remain on the original 99-year Sydney Harbour Foreshore Authority lease, which now comes under the umbrella of state government landlord Property NSW. Sam McVay of McVay Real Estate negotiated the deal on behalf of Mirvac.
Wingate, a prominent Melbourne-based finance and investment house, expects to raise $32.7 million for its new Harrington Street Trust, which will hold the car park. Wingate will co-invest in the trust and manage it.
The trust will deliver a 6.5 per cent initial distribution yield to investors, which will grow to 7 per cent over the four to six year term of the trust.
Based on the $52.02 million acquisition price, the deal was struck on a yield of 4.7 per cent.
Wingate hopes to increase rental income when the current lease with Wilson Parking comes up for renewal in August 2024 and by repositioning the ground floor retail component, currently occupied by cocktail bar Maybe Sammy and a convenience store.
While CBD car park usage has fallen during the pandemic as more people have worked from home, Wingate expects both demand for parking and rents paid by operators (and therefore rates paid by users) to rise as more than 230,000 square metres of new Sydney CBD office supply comes online over the next four years, and while new supply of parking spaces remains highly constrained.
“You can’t construct new car parks of material scale in the city while new commercial developments only allow one new car space per 50 square metres of land area,” said Daniel Farley, head of direct property at Wingate.
He added that demand for parking at the Quay West Car Park was underpinned by an agreement between Mirvac and Wilson Parking giving Mirvac the option to occupy almost half of the car park (about 260 bays) to provide overflow parking for its city developments including 200 George Street and 55 Pitt Street
“We did a lot of research and found car parks to be one of the most defensive asset classes,” Mr Farley said.
“In the institutional world, there’s been a structural change in [workplace] agreements. More executives are driving to work rather than taking public transport,” he said.
