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16 Spring Street sells for $21.9 million, at a yield of 6.62%
SYDNEY, 22 August, 2013 – A Malaysian group has purchased the multi-tenanted CBD office building at 16 Spring Street for $21.9 million, at an equivalent yield of 6.62%.
The sale was handled by Jones Lang LaSalle’s Director – Sales and Investments James Aroney on behalf of Standard Life Investments.
According to Mr Aroney, amidst the global property market, the Sydney CBD is seen as a stable, long-term investment. Adding to this were several other appealing factors driving high interest in the property.
“We received significant interest in the 16 Spring Street. There were close to a dozen groups competing for the asset, comprising several offshore and local private investors. This high level of competition pushed the yield lower from over 7% to 6.6%.
“Even with a 2.5-year Weighted Average Lease Expiry (WALE), being multi-tenanted, with a staggered lease expiry profile, the building represents a secure long-term investment.”
Mr Aroney said the spread between core multi-tenanted assets and secondary assets is continuing to widen. “Private investors are actively seeking multi-tenanted, well located assets such as 16 Spring Street.
“In addition, there are few similar opportunities available in the market, catering for smaller tenants. This is only the second sub-$50 million public offering this year. The other was 121 Harrington Street.”
The office building at 16 Spring Street is modern and refurbished, with a Net Lettable Area (NLA) of 3,172 sqm and fully leased net income of approximately $1,589,686, as at August 2013.
The property comprises 10 levels of office accommodation, a ground and mezzanine office-retail tenancy and parking for five vehicles.
According to Mr Aroney, there is a potential for a retail component, offering further enhancements for the property. “The lower level car parking area could be converted into retail accommodation, subject to council approval.
The property is located in the prime financial core of Sydney’s CBD, directly opposite Australia Square and surrounded by Sydney’s premier office towers including 1 O’Connell Street, Governor Phillip and Macquarie Towers, and Sydney’s newest premium-grade tower, 1 Bligh Street.
The building was recently refurbished and is situated on a high-profile corner, offering good natural light and amenity, and attractive vistas across Pitt Street. The recent refurbishment includes a new contemporary lobby and lift upgrade.
Current tenants in the building include Austcorp Consulting recruitment services, Malaysian Airlines, Johnstone Haines accounting firm, and Genesis IT & T recruitment.
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