ASX-listed Abacus Property Group has exchanged contracts to buy a Sydney CBD office building for $250 million, reflecting a 4.63% cap rate.
Located at 77 Castlereagh Street, the property offers 11 levels of circa 1,200 sqm floorplates over the Westfield Sydney Living Centre and has a prominent Castlereagh Street entry.
The building is 95% leased with a weighted average lease expiry (WALE) of 4.3 years.
Abacus said the asset was currently leased at rents significantly below the market and offered material upside in the medium term, while generating a 4% fully leased yield.
“Being integrated above Westfield Sydney, a world-class retail offering, the acquisition continues the Abacus theme of acquiring assets with good amenity and a clear path to income growth,” said Abacus Property Managing Director Steven Sewell
“With a pathway to medium term repositioning, this is a great opportunity for the group to implement active asset management strategies and transition the building to an A-grade standard which will unlock rental reversions and ultimately deliver long term sustainable returns for our stakeholders.”
The 5.5-star NABERS energy-rated property is located near existing and extensive public transport connections and is set to benefit from the Martin Place Metro Station completion in 2024.
The transaction is expected to close in January next year.
There have been plenty of Sydney office buildings traded in recent months, including US-headquartered LaSalle Investment Management buying a grade-B office in North Sydney for $152.4 million.
Last week, Stadia Capital purchased a Harry Seidler-designed office building in North Sydney from a consortium of investors for more than $80 million, as the Australian Unity Office Fund sold a grade-B office in Parramatta for $66 million.
Dexus sold a Sydney CBD office to Charter Hall’s prime office fund for $385 million; Singapore-listed CapitaLand Integrated Commercial Trust purchased two grade-A office buildings in Sydney for $330.7 million, and Keppel REIT purchased a grade-A office development in North Sydney for $327.7 million.
Outside of Sydney, Growthpoint Properties recently bought a grade-A office building in Canberra for $84.6 million, in addition to GIC and Charter Hall recently forming a joint venture to buy the 50 Marcus Clarke office building in Canberra’s CBD for $335 million.
In Melbourne, Irongate Group recently snapped up a 50% interest in an office building in Cremorne for $130 million, while ISPT bought the headquarters of Victoria’s Country Fire Authority in Melbourne’s eastern suburbs for $35.8 million.