Propertylink recently announced that the Propertylink Enhanced Partnership (PEP) has entered into a contract for the sale of 80 Mount Street, North Sydney for $71 million reflecting an initial yield of 4.32%.
The sale price represents a 29% premium to current book value and delivers an annualised total equity return of 58% for investors.
80 Mount Street is a B-grade office asset comprising of 6,204 sqm of net lettable area across 14 levels. The building was acquired by Propertylink, via the PEP fund, as part of the acquisition of the Denison Portfolio in August 2016.
Propertylink’s Chief Investment Officer, Peter McDonald said “Since the acquisition of 80 Mount Street, we have deployed a targeted capital expenditure program to refurbish and upgrade the building. Most significantly however, we have undertaken extensive leasing activity across 55 percent of the building area, driving occupancy from 75 percent to 92 percent over the last two years.”
With the approval of Goldman Sachs, Propertylink commenced a campaign to market the property for sale in July 2018.
“The sale campaign attracted unprecedented levels of interest from both local and offshore groups who were attracted to the location of the asset in the heart of North Sydney, a market with upside potential and just 6.3% vacancy,” Mr McDonald said.
“Through the realisation of strong cashflows during ownership and the execution of an active repositioning strategy, we have delivered excellent returns for our investor Goldman Sachs and for Propertylink,” he said.
Propertylink’s Managing Director and CEO, Stuart Dawes said he was very pleased with the strong returns being delivered across the PEP fund, demonstrated by the divestment of 80 Mount Street.
“The PEP fund has been one of our most successful vehicles. Significant leasing and capital expenditure programs delivered through our industry leading expertise in active asset management are driving excellent outcomes,” he said.
“Our demonstrated success in delivering value across our investment management platform continues to underpin our excellent relationships with existing and new global institutional investors, who seek opportunities in the Australian real estate market. This has positioned the business for solid growth in FY18, with a number of initiatives to deliver growth in external funds well advanced,” Mr Dawes said.
Propertylink has a 25 percent co-investment in the PEP fund with Goldman Sachs holding the majority interest of 75 percent. Following the sale of 80 Mount Street, the fund comprises of 8 office and industrial assets.
Completion of the sale is expected to occur in November 2018.
The selling agents for 80 Mount Street were Knight Frank’s Tyler Talbot and Dominic Ong and CBRE’s James Parry, Kenny Duncanson and Sharon Yang.
You can read more about the 80 Mount Street transaction in the media here: https://www.theaustralian.com.au/business/property/hong-kong-group-keen-on-north-sydney/news-story/45d75b525f6e52704ec3a85c2fc2bff1