This article is from the Australian Property Journal archive
ASTUTE investor Stirling has sold a metropolitan office complex in Liverpool in Sydney’s west for $54.50 million on a tight capitalisation of 5.95%.
Stirling acquired the 203 Northumberland Street Liverpool property only three years ago, along with an adjoining car park for $46.7 million.
64 Bathurst Street, the adjoining lot, was sub-divided and sold in earlier 2022 for $7.9 million.
Stirling was formed in 2018 when Legacy Property, led by Matthew Hyder, joined with former Bankminster Properties and Centuria executives, including Matthew Coy and David Govey, and Scott Girard, formerly of M&G Real Estate.
Stirling’s director and head of property, Scott Girard, said that 203 Northumberland Street presented one of the best, if not the best, tenant profiles in the metropolitan Sydney office market with very strong underlying cash flow growth which is reflected in the sale metrics.
Stirling’s asset repositioning strategy included subdividing and selling 64 Bathurst Street, a capital expenditure program to significantly enhance amenity, re-leasing vacant space and increasing rents. As a result, the building increased its occupancy rate to 95% with a 4.7-year WALE compared to 82% and 3.6 years WALE at the time of purchase.
“Tenant demand for quality office assets in the Liverpool market during and post Covid has been robust. Despite the impacts of Covid, Stirling increased average rents in the property by 27% since acquisition with lease incentives of 18%, significantly outperforming other Sydney office markets.
“The positive sale result reinforces investor demand for well-positioned office assets in established growth corridors, with quality tenants secured on long leases and strong cash flow growth. This is reflected by the sub 6% capitalisation rate at which the property was sold in a market where listed REITs are trading up to 35% below their NTAs and after the RBA increased the cash rate by 300 bps to December 2022,” he added.
Girard said the sale was a year ahead of its planned investment schedule and will return investors a total return of 10.3% p.a. The selling price of $54.5 million, represents a capitalisation rate of 5.95% and $7,381 per sqm of NLA.
The sales campaign was handled by Wally Scales of Knight Frank and John McCann from Colliers.
