This article is from the Australian Property Journal archive
MELBOURNE-based Quintessential has settled its $293.1 million acquisition commercial building, One Margaret Street in the Sydney CBD. Securing the site from Dexus for a 21% discount of the asset’s June 2022 book value.
The 18-storey CBD office tower, located between the redeveloped Wynyard Station and the Barangaroo precinct, is set for major redevelopment as Quintessential pledges $90 million to refurbish and reposition the A-grade building with works set to commence in 2024.
The redevelopment plans include a 10,000 sqm podium with typical floor areas of around 1,850sqm NLA.
With the podium, external spaces and winter gardens expected to reach completion in 2026 or early 2027.
“One Margaret Street is excellent value; we have acquired a prime quality asset at $14,240 per sqm NLA with additional land at no value. We intend to add 4,000 sqm NLA to the asset, reflecting 20% additional area,” said Andrew Borger, chief investment and operating officer at Quintessential.
Quintessential will upgrade the building’s services to establish the site as an all-electric building.
With the repositioning works to use low carbon embodied materiality, including green concrete, green reo and green steel to improve upon the already impressive 5.5 NABERS energy rating.
“We look forward to collaborating with our new tenants and all relevant stakeholders to reimagine this outstanding property with a high ESG focus, building upon the strong tenant and investment demand for repositioned assets,” added Borger.
The purchase marks Quintessential’s latest strategic acquisition and the fifth 100% freehold acquisition in the Sydney CBD in the last five years.
“With recent inflationary pressures and higher input costs, new developments in Sydney will generally be challenging. Repositioning key strategic assets will be economically efficient and provide quality tenant accommodation by price point,” added Borger.
“In a challenging market, we are pleased to have raised more than $200 million of equity and a senior debt facility via the Commonwealth Bank of Australia.”
Quintessential’s 26-storey office tower at 30 Pirie Street, will also be refurbished, after MaxCap’s $35 million backing after being awarded a mandate by the Clean Energy Finance Corporation to finance sustainable building upgrades.
“We think the market is overpricing risk in well-located, A-Grade assets, which provides an opportunity for our investors to capitalise on,” said Shane Quinn, executive chair at Quintessential.
“Comparatively B-Grade and secondary assets are struggling to attract tenants, which has not yet been fully reflected in pricing. Once repositioned, this will be a very attractive asset, particularly to institutional and foreign capital, seeking a 100% freehold interest.”
