Sydney council pays $55m for Liverpool office tower
Sydney’s Inner West Council, which administers suburbs including Balmain, Dulwich Hill and Rozelle, has seen value in the Liverpool CBD office market after acquiring a revamped eight-level building for $54.5 million on a 5.95 per cent yield.
A spokesman said the acquisition of 203 Northumberland Street would further improve the council’s bottom line following the merger in 2016 of the former Ashfield, Leichhardt and Marrickville councils to create the Inner West Council which generated savings of $22 million.
“The income from the rent of approximately $3 million annually is all part of Council’s strategy to improve its long-term financial position and ensure the Inner West’s financial sustainability,” he added.
Funding for the acquisition came from land that was acquired by the NSW state government for the Sydney Gateway Project.
“At the 25 February 2022 Council meeting, Council decided that funds from the compensation received should be used for the purchase of property in order to replace the lost income,” the council spokesman said.
The eight-story Liverpool office building offers 7290 square metres of lettable area and four basement parking levels for 146 cars. It sold with a 95 per cent occupancy rate, 4.7-year weighted average lease expiry and 4.5 star NABERS energy rating.
It was offloaded by Stirling Property Funds, which generated a 10.3 per cent total return on its investment.
Stirling spent $2.4 million upgrading the building including adding a new lobby, air conditioning and lifts and re-leased vacant space, generating a 27 per cent average uplift in rents.
Tenants introduced at 203 Northumberland by Stirling include the NSW Department of Health and Ramsay Health. They joined the Commonwealth Bank, Westpac Bank, Brydens and Catholic Care in the building.
Stirling acquired 203 Northumberland Street and the adjoining parking lot at 64 Bathurst Street for $46.7 million in 2019.
It raked in an additional $7.9 million from the adjoining carpark, which it subdivided and sold in earlier 2022 to developer Joseph D’Agostino’s FTD Holdings.
Stirling’s director and head of property, Scott Girard, attributed the leasing success and rental surge at 203 Northumberland Street to its successful repositioning program and the fact that it is just one of two institutional-grade office buildings in the Liverpool CBD.
“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,” Mr Girard said.
“It’s a very positive outcome in the current market,” he added.
The sales campaign for 203 Northumberland Street was handled by Wally Scales of Knight Frank and John McCann from Colliers.
In February 2020, the neighbouring four-storey office building at 211 Northumberland Street, sold to local investor Stanley Xue for $52.5 million on a 6.6 per cent initial yield.
