Investa locks in law firm lease at Sydney landmark
Investa Office Fund has finalised a key lease renewal with a major law firm at its landmark Sydney tower at 126 Phillip Street.
Under the agreement with Allens Linklaters, the legal eagles will occupy 8424 square metres for another 7.5 years after their current tenancy expires in June 2019.
The new deal extends until the end of 2026. Rent from Allens now accounts for 27 per cent of income at the tower in central Sydney.
The law firm will reduce its footprint – now at 11,312 square metres – under the new agreement, surrendering two floors to consolidate into six floors.
The agreement is an important one for Investa, itself a tenant in the same building. It de-risks the fourth largest lease expiry coming up over the next three years in Investa’s portfolio.
The renewal reduces Investa’s lease expiry in 2019 by 1.4 per cent and improves the average lease expiry of the Phillip Street tower by 1.7 years.
The listed Investa trust holds a 25 per cent stake in 126 Phillip Street.
“The proposed renewal of the Allens lease is testament to our strong long-term tenant relationships,” said fund manager Penny Ransom.
The agreement with Allens follows another major renewal late last year, when the federal government committed to 11,973 square metres for 10 years at 836 Wellington Street, in Perth.
“The proposed lease extension provides income stability and secures the long-term outlook for the asset,” Ms Ranson said.
In December Investa flagged a strong uplift in the valuation of its $3.6 billion portfolio after repelling a takeover bid from listed fund manager Cromwell Property Group.
The draft valuations will add $150 million to $160 million, or 8 per cent to 8.6 per cent, over the current book value of the IOF portfolio.
