Sydney's Suncorp building sold for $395 million

Larry SchlesingerDecember 8, 2020

A private offshore investor has paid $395 million for 259 George Street, the 42-storey, 200-metre-high office tower in the Sydney CBD.

The building makes up 9% of the value of the Commonwealth Property Office Fund, which is managed by Colonial First State.

The sale price was negotiated at a 15.3% premium to the asset’s June 30, 2011 independent valuation of $342.5 million, a 2.9% rise on the previous year following a revaluation of the portfolio.

In 1999, the fund acquired 50% of the building for $127.5 million with a rental value a year of $5,454 per square metre. The remaining 50% interest was acquired in 2005 for $125 million.

The tower was constructed in 1983 and underwent a $115 million refurbishment in 2006, which repositioned the asset to high A-grade quality.

Suncorp, the anchor tenant, has naming rights for the concrete-and-glass building. Other tenants include Standard & Poor’s, technology firm GBST and ASX-listed investment firm Argo.

Level 31 in the building is listed for lease by Ray White commercial agent Anthony Harris at a gross rent of $805 per square metre for 950 square metres of space.

Darren Steinberg, managing director of property at Colonial First State Global Asset Management described the result as a very pleasing result for fund unit holders.

Fund manager Charles Moore says the sale mitigates upcoming lease expiries along with projected capital expenditure requirements over the short to medium term.

The sale of 259 George Street follows the sale of three of the fund’s Perth-based office assets to GDI Property Group on July 12, 2011 for $152 million, close to their book value.

In June the fund reported a valuation upgrade of 2.9% covering 16 of its 29 office assets, for the year ending June 30. This lifted valuations by $68.2 million on the previous year's valuations.

Moore said at the time the revaluations confirmed the stabilisation in investment yields and the values of Australian office property.

"Despite the number of external shocks experienced in the broader market, we are encouraged by the solid transaction activity levels and expect to see positive valuation outcomes going forward," Moore said.

Settlement on 259 George Street is due on October 31.

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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