This article is from the Australian Property Journal archive
HONG Kong toy billionaire Francis Choi has copped a loss on the quiet $196.4 million sale of the 1 Castlereagh Street building in the heart of Sydney’s CBD, amid a flurry of office sector activity that also has seen the headquarters of Google and Nine in Sydney and Melbourne hit the market.
Choi’s off-market divestment was struck at more than 10% below the $220 million-plus he paid Blackstone for the asset late in 2017, and he spent a further $37 million adding two storeys of penthouse offices, upgrades, and additional retail space.
That 2017 acquisition came few months after his $335 million buy of the close-by ASX headquarters, the Exchange Centre, at 20 Bridge Street – which Choi has also been looking to offload in the past few months, and on which he is also expected to take a hit with the ASX moving to Investa and Manulife’s 39 Martin Place.
Choi is the founder and chairman of the world’s largest toymaker, Early Light International, and has further property and hotel holdings in Hong Kong and China.
At 1 Castlereagh Street, which is around 85% occupied, major the tenants include Dental Boutique, Citrus Group, the Recruitment Company, Verkada Australia, Wrays and Red Bottle.
The tower is on a 1,164 sqm site on the corner of Castlereagh Street and Hunter Street, opposite the entrance of the newly completed Sydney Metro at Martin Place Station, and has a net lettable area of 12,418 sqm.
The buyer is SLMC Property Australia Pty Ltd, a wholly owned subsidiary of Singaporean group Sim Lian – Metro Capital Pte Ltd.
“The 27-storey office building is located at the financial core of Sydney’s CBD next to the newly opened Martin Place railway station with good connectivity and access to amenities,” Metro said in a Singapore Stock Exchange announcement.
“This opportunistic acquisition strategically expands the group’s footprint in Australia and marks Metro’s 18th property and fifth office asset in the portfolio.”
Knight Frank agents Dominic Ong, Paul Roberts, Ben Schubert and Jonathan Vaughan managed the sale.
Knight Frank is also handling the sales campaign of the 20,150 sqm 20 Bridge Street tower. The ASX has lease over more than 45% of the building until 2028.
It comes as the GPT throws down to the market the headquarters of Google Australia in Sydney and Media House in Melbourne, occupied by Nine, with expectations of over $450 million.
Office values have taken a hammering in recent years as the sector faced structural headwinds and high interest rates in the fallout of the pandemic. The listing comes as the latest MSCI Capital Trends Report shows the gap between buyer and seller expectations in Melbourne’s office market is widening further.
Both assets are owned by the GPT Wholesale Office Fund, which is looking to recycle capital and seeking to capitalise on early signs of renewed interest in the sector, off the back of several office transactions in the market this year.
The Google Australia headquarters in Pyrmont, in the building known as workplace6, is a fully leased, prime commercial office asset spanning 18,196 sqm of net lettable area across a 5,694 sqm site. Built in 2008, it was the first office development in NSW to achieve a 6 Star Green Star rating for Design and As-Built, and has achieved carbon neutral status.
Joint selling agents Cushman & Wakefield said workplace6 would appeal to core-plus investors.
“With the highest attainable ESG standards, absolute waterfront position and genuine campus-style offering, workplace6 provides investors long-term income security and future growth potential from one of the world’s strongest covenants,” said Mitch Noonan from CBRE.
Google acquired the neighbouring property at 42 Pirrama Road – the former Seven Network site – for $170 million in 2018 and has since obtained $72 million refurbishment approval.
655 Collins Street stands at the high-profile intersection of Collins and Spencer Streets, directly opposite Southern Cross train station and is fully leased to Nine until 2029. Constructed in 2009, the property offers 16,620 sqm of net lettable area and has a 5.5-star NABERS Energy rating.
Nick Rathgeber from Cushman & Wakefield 655 Collins Street presents a “rare opportunity for repositioning or even large-scale development on the site, including the possibility of residential projects or enhancing its existing office profile”.
“We expect interest from a range of value-add office investors and developers looking to capitalise on its prime location.”
