This article is from the Australian Property Journal archive
BUILT has kicked off construction on the adaptive reuse development of the Harry Seidler-designed heritage office building into a new Reddam House campus in North Sydney, following a $120 million forward purchase agreement with Singaporean asset manager Keppel Corporation.
Keppel acquired the property at an initial yield of 4.25% in a put-and-call arrangement for its $3 billion education-themed Keppel Education Asset Fund (KEAF) and will take ownership of the asset following the change of use approval and refurbishment works.
Inspired Education, who manages a portfolio of schools globally and operate the Reddam House brand in Australia, will take a 20-year lease over the 9,150 sqm of floor space with an option for an additional 20 years.
Under the arrangement with both Inspired Education and Keppel, Built is responsible for managing the upgrade and transformation into a 1,560-student K-12 campus that will open for the 2025 school year.
Inspired Education will self-fund its adaptive re-use fit-out. Built originally acquired the 41 McLaren Street property for $80 million in late 2021. Seidler designed the building in 1971.
“Through our unique ability to deliver a turnkey facility for Inspired Education that also matched the requirement of the KEAF for a long-term stable income in the education sector, we achieved one of the strongest results of 2023 against the backdrop of a market challenged by increasing interest rates and yields,” Built development director Jono Cottee said.
He said Built leveraged their position as both developer and builder to solve the planning and construction risk in the project and create an attractive solution for tenants and investors alike while delivering a strong return on investment based on initial purchase price.
“By navigating the complex planning, heritage, and construction requirements, we can provide Inspired Education with the certainty of delivery for a new facility that meets their ongoing growth and expansion.
“Keppel are then provided with security of income for their investors in a fully refurbished building that comes with a long-term lease with CPI backed increases with a leading global operator of premium schools,” he added.
Works on the property will add an additional 1,650 sqm of education space to the existing building and transform the car park into a school drop-off and auditorium. The new campus will provide state-of-the-art facilities such as a performance space, theatre, sports hall, as well as modern classrooms, including high-tech science and design tech labs, music rooms, drama and dance studios, and a library.
