Iconic Sydney Office Towers Up For Sale

25% Stake In Iconic Sydney Office Towers Up For Sale

AUSTRALIA – A 25 percent interest in the Governor Phillip Tower and the Governor Macquarie Tower has been launched for sale by real estate behemoth GPT, which have joined other office sellers amidst the COVID-19 crisis, reported The Australian on Tuesday morning (3 November).

The 2 office towers are part of 1 Farrer Place, a project valued at roughly A$2.4 billion that is considered one of the biggest developments within Sydney’s central business district (CBD). As of 30 June 2020, the quarter stake in the said office buildings was valued at about A$586 million.

The transaction is expected to be closely watched as it will serve as a price guide for Grade A office space in a property market that has been badly affected by the pandemic.

It is among the biggest building complexes to enter the market during the virus outbreak, although China’s sovereign wealth fund, China Investment Corporation (CIC), has already acquired an additional 50 percent stake in Grosvenor Place in September for about A$1 billion. The deal, which raises CIC’s overall stake in the office building to 75 percent, values the property at A$2 billion.

Still, a Lendlease managed office fund will have the right of first refusal to buy GPT’s 25 percent stake, followed by Dexus as they are the co-owners of 1 Farrer Place.

The massive development comprises 84,900 sq m of premium commercial space. These include the Governor Macquarie Tower, 41-storey office building, and the Governor Phillip Tower, an office tower with 64 levels.

Apart from 5 restored historic terraces known as Phillip Street Terraces, the project also comes with a 9-storey basement car park that can accommodate over 654 vehicles.

Major occupants of 1 Farrer Place include law firms MinterEllison as well as King & Wood Mallesons.

Governor Phillip Tower and the Governor Macquarie Tower are among “Australia’s most iconic office assets attracting high quality tenants. It is rare for opportunities of this quality to be offered to the market and we expect it will be well sought-after by both domestic and off-shore investors,” said GPT’s CEO Bob Johnston.

However, some market watchers questioned the timing of the divestment due to unfavourable situations due to COVID-19 and GPT’s good financial condition.

“Given GPT’s sound balance sheet, time frame of the development pipeline and certainty of income from the high quality 1 Farrer Place asset, we question the need to divest the asset at this point in time,” said Macquarie Equities.

Nevertheless, real estate firms revealed than top-notch office buildings in Australia are still attracting high prices and strong interest even during the virus outbreak.

For example, there are at least three groups vying to acquire a 1/3 stake in the 1 Bligh Street office tower, one of which is Dexus, which already owns 2/3 of the building.

Investa Property Group is also disposing A$900 million worth of office assets, including a 50 percent stake in 135 King Street.

A 50 percent stake in 101 Miller Street and Greenwood Plaza mall is also up for grabs courtesy of fund manager Nuveen.

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