- Set for a $90M redevelopment.
- The new podium is expected to be delivered into the market in 2026/27.
- Upper floor works will commence in 2024.
The Sydney office is located between the redeveloped Wynyard Station and the Barangaroo precinct, and is above Sydney’s primary subterranean pedestrian connection from the Barangaroo Wharf to Pitt Street.
According to Dexus, the A-grade office building had a weighted average lease expiry (WALE) of 2.1 years and an occupancy of 93.7% as at 30 June 2023. The sale price was in line with the 30 June 2023 book value and is expected to settle in October this year.
Dexus said that it will attain a $50 million equity interest in the trust that will hold the property and be managed by the incoming purchaser.
This morning, Quintessential was confirmed as the purchaser of the property.
“One Margaret Street is the largest asset Quintessential has ever purchased,” said Quintessential executive chair, Shane Quinn.
“I never thought we could find an A-Grade asset in a location such as this over Wynyard Station in the Sydney CBD and still be able to provide our projected desired returns for investors.”
According to Quintessential CIO, Andrew Borger, the company raised more than $200 million of equity and a senior debt facility via the Commonwealth Bank of Australia (CBA).
“We appreciate the support of our long-term loyal investor base and have welcomed many new investors who see the counter-cyclical opportunity in the market,” said Quinn.
“We have waited a long time to be able to acquire quality assets such as this at such attractive pricing and below replacement cost. We think now is the time for creating intergenerational wealth and returns for investors at this point of the cycle.
“We think the market is overpricing risk in well-located, A-Grade assets, which provides an opportunity for our investors to capitalise on.
“Comparatively, B-Grade and secondary assets are struggling to attract tenants, which has not yet been reflected in pricing, so we think the market is mispricing this.
“Once repositioned, this will be a very attractive asset, particularly to institutional and foreign capital, seeking a 100% freehold interest.”
Quintessential to redevelop the office
The company plans to commit $90 million to reposition the 18-storey, A-grade building.
Collaborating with the council to adhere to their strategic framework, Quintessential plans to construct a 10,000 sqm podium with typical floor areas of approximately 1,850 sqm of net lettable area (NLA), along with expansive outdoor areas and winter gardens exceeding 1,000 sqm.
Upper floor works will commence in 2024, and the building is set to go all-electric. Following planning approvals, the new podium is expected to be delivered into the market in 2026/27 when a void in new supply for quality A-grade space is expected.
“One Margaret Street is excellent value; we have acquired a prime quality asset at $14,240 per sqm NLA with additional land at effectively no value. We intend to add 4,000 sqm NLA to the asset, reflecting 20% additional area,” said Quintessential CIO, Andrew Borger.
“With recent inflationary pressure, new developments in Sydney will be challenging and repositioning key strategic assets is something we will see more of in the medium to long term.”
“We look forward to collaborating with our new tenants and all relevant stakeholders to reimagine this outstanding property with a high ESG focus, building upon the strong tenant and investment demand for repositioned assets.”