Arcadia encircles World Square in $176m deal
Boutique investment house Arcadia has put together the final piece of the puzzle in its World Square holding in the Sydney CBD, taking a half stake in 52 Goulburn Street for $176 million.
On the sell side was Credit Suisse, which had bought its stake in 2007 from Brookfield and which still holds the remaining half stake.
The deal was transacted at a passing yield of 4.76 per cent, although that could move to around 5.2 per cent, based on rent rises.
It is a highly strategic acquisition for Arcadia, which manages more than $1.5 billion in real estate assets on behalf of its institutional funds and mandates.
Arcadia’s acquisition gives the fund a half stake – worth around $900 million – across the entire multi-asset World …
Arcadia’s acquisition gives the fund a half stake – worth around $900 million – across the entire multi-asset World Square precinct. Ethan Rohloff
The stake in 52 Goulburn Street will be held in Arcadia’s Australian Wholesale Property Fund, a vehicle backed by a club of investors.
That fund effectively has a half stake – worth around $900 million – across the entire multi-asset World Square complex now.
That includes half stakes in 680 George Street and 560 Goulburn Street, with Brookfield as its joint owner, along with an investment in the World Square shopping centre and car park, which is jointly owned with ISPT.
“As a result of the the acquisition of 52 Goulburn Street the Fund’s combined investment across World Square will increase to over 105,000 square metres,” Arcadia’s joint managing director Hamish Flett told The Australian Financial Review.
Good value
The 12-level office building at 52 Goulburn Street was completed 2007 and comprises 23,100sq m of office accommodation and 210 car parking spaces
It is fully leased to the Australian Tax Office with a lease expiry of 4.6 years
The deal was brokered by JLL’s Rob Sewell, Paul Noonan, Stuart McCann and Luke Prokuda and Knight Frank’s Ben Schubert, Paul Roberts, and Neil Brookes.
“We are currently seeing increasing investment activity in the Midtown precinct as it is representing good value in comparison to the core,” JLL’s Mr Sewell said.
“Previous investor interest was from Asian private investors and developers looking for office buildings that could be converted to residential.
“Now we have seen the demand switch to astute local and offshore institutional investors recognising the significant rental upside,” he said, noting recent sales in precinct including Charter Hall’s $340 million acquisition of 231 Elizabeth Street and ARA’s acquisition of 320 Pitt Street for $275 million.
Knight Frank’s Mr Schubert said there had been strong interest in 52 Goulburn Street due to its stable cash flow and federal government covenant.
