$200 million hopes for Allco collapse Sydney office listing
Sydney’s landmark Exchange Centre, the home of the Australian Securities Exchange, has been listed with $200 million hopes by receivers.
It’s being offloaded by Record Realty, the listed property arm of Allco Finance Group, which paid $238 million to German fund Deka Immobilien in 2006.
Record bought the 13-storey building on the corner of Bridge and Pitt streets after a bidding war that reputedly included GPT, Mirvac, Commonwealth Property Office Fund and Stockland.
Deka had paid $177 million for the site in 1999.
The ASX has a 12-year lease signed in 2000, with a further five-year option. The deal incorporates an annual fixed rental increase of 4.5%.
At the time of its purchase, with just $68 million of equity, Record's chief executive, Stewart Tillyard, said the Bridge Street property was a "trophy" asset for the growing business.
"The deal specifically fits with our investment mandate, which is to focus on properties with long-term quality tenants," Mr Tillyard said.
It was 2009 when administrators were appointed to the management arm of its office property business, after Record Realty's main bankers, the then struggling Bank of Scotland International, called in its debts. The bank has a reported $190 million exposure.
The building was thought to be sold in 2009 at somewhere between $140 million and $170 million, but the deal did not eventuate. Its reputed buyer was the Hong Kong-based CLSA Asia Pacific Markets, the brokerage and investment arm of French bank Credit Agricole.
There has since been a renovation and several vacant floors tenanted that have improved its occupancy to 93%.
Receivers KordaMentha have appointed CBRE executive managing director Scott Gray-Spencer and CBRE regional director of institutional investments, Rob Sewell, to undertake the marketing campaign.
Mr Gray-Spencer said the quality of the building and the premium tenancy profile would attract significant buyer interest.
“The Exchange Centre is one of Sydney’s most securely leased prime office investments, with the recently refurbished entrance foyer and public viewing gallery attracting a number of quality tenants to the building,” Mr Gray-Spencer said.
“Tenant enquiry has resulted in approximately 3,400 square metres of new tenant commitment and a further 1,000 square metres of lease renewals in the past six months which has increased the average lease expiry to six years.”
Mr Gray-Spencer suggested as the 20 Bridge Street building was the only real prime asset of its size to be offered this year, pent-up market demand was expected to fuel interest.
“Currently there is more capital looking to invest in the office sector than prior to the GFC.
“In particular, Australian domestic superannuation and wholesale funds are becoming increasingly active and presently have $10 billion in firepower.”