Allco Sydney asset re-listed after last sale fails to get across the line
The receivers of the failed Record Funds Management have re-listed their vacant office block holding at 149 Castlereagh Street with offers at or under the $50 million mark expected to be considered.
Sales agents James Aroney and Robert Harris of Jones Lang LaSalle initially listed it with $60 million hopes in April 2010.
At one stage Telstra was considering tenanting the building, with an investor on board but the sale did not proceed following a due diligence report.
The building was recently redeveloped at a cost of $38 million to provide A-grade office and retail accommodation in the heart of the precinct.
Record was part of the failed Allco Finance Group.
Harris says the re-listing represents a “refreshed” offering in a market that is now “slightly different”.
The building stands on a 1,300-square-metre site with the lower ground, ground and level 1 comprising about 2,300 square metres of retail space and about 10,700 square metres of office space across 10 floors with floor plates of over 1,000 square metres.
The gross office rental is estimated at $573 per square metre, equating to annual income when fully leased of more than $8 million.
It has total annual outgoings of $1.7 million
Harris says it is rare for a building in Sydney’s CBD to have more than 10,000 square metres of contiguous office space.
“149 Castlereagh Street provides tenants with an opportunity to occupy several adjoining floors which is ideal for medium to large organisations,” he says.
It is currently untenanted except for a small 102-square-metre shop and is one of only five buildings in Sydney’s CBD with over 10,000 square metres of contiguous space.
The tower features environmentally sustainable design elements, modern fittings and fixtures and balconies on each floor. The entrance has a three storey water feature as well as a three-storey public art design by glass artist Lisa Cahill.
With the amount of office stock “pretty lean” Harris says the building represents a “value-add” opportunity with the refurbishment now fully completed.
An issue of contention has been the building’s location near to Grocon’s 46-storey project at 163 Castlereagh.
However, with the new tower now half-way complete, Harris says it is clear that it will have a beneficial impact on 149 Castlereagh rather than a negative one.
Efforts to sell 149 Castlereagh date back to April last year, when it was placed on the market by receivers Ernst & Young.
In April 2010 the price tag was around the $60 million mark, but it had fallen to around $50 million by June 2010 despite a $38 million refurbishment, which was expected to increase its value to $90 million.
In March this year it was reported that receivers Ernst & Young were negotiating a $50 million sale of 149 Castlereagh Street, but this did not eventuate.
The Abacus Property Group and Hong Kong-based CLSA Capital Partners were among the parties expressing an interest in the building during a sales campaign that concluded on June 3 last year.
Record Funds Management owned 149 Castlereagh Street before the company was placed in receivership in August 2009 as part of a property portfolio once worth about $2.1 billion.
Suncorp is the mortgagee and is reportedly owed between $70 million and $80 million.
It was bought by Allco for about $33 million in 2006.
The property is in the same precinct as major developments including the new ANZ/Freehills complex (adjoining to the south), the landmark Westfield redevelopment and the recently completed Mid City / 420 George Street project.
Aroney says the new developments surrounding the building will attract significant interest from investors looking to get a foothold in the area.
“This precinct, along with Barangaroo, offers tremendous upside and capital growth from both a commercial and retail perspective,” he says.