An Adelaide syndicate led by Allan Breakwell is preparing to sell the city’s prominent 75 Hindmarsh Square office building after more than 12 years of ownership.
CBRE’s Ian Thomas and Alistair Laycock have been appointed to steer the Expressions of Interest campaign, which is expected to generate significant buyer enquiry given the building’s strong tenancy covenants and highly desirable Hindmarsh Square location
Mr Thomas said the campaign also coincided with a genuine lack of opportunities at a time when Adelaide was in focus for a broad range of buyers.
“There is heightened interest in Adelaide from offshore groups, domestic institutions and private investors, given the city’s attractive relative returns and stable economic and leasing landscape,” Mr Thomas said.
“Significant CBD office sales totaling more than $750m were completed in Adelaide in 2019, more than double the long-term average and eclipsing the record set in 2018. While this has led to significant cap rate compression, Adelaide office investments still offer compelling return premiums relative to other eastern seaboard markets.”
The five-level Hindmarsh Square building is over 96% occupied, with the vendors offering a rental guarantee over the small quantum of vacant space.
Prominently positioned overlooking Hindmarsh Square and situated on the corner of Pirie and Hyde Streets, the building has a net lettable area of 4,662ssqm, including two high profile, ground floor tenancies.
With a Weighted Average Lease Expiry of 4.57 years, the asset provides a strong cash flow underpinned by leases to top tier tenants NOVA Entertainment, Sony Interactive, the Office of the National Rail Safety Regulator and Lidums Dental.
It also offers 74 car spaces over three basements levels - providing one of the highest car parking ratios in the Adelaide CBD.
“The Adelaide leasing market is on an upward trajectory, with the defence, resources and health and medical research sectors driving occupier demand,” Mr Laycock said.
“This is underpinning interest in Adelaide as an investment destination, particularly given the removal of stamp duty on office transactions and the decrease in the top land tax rate from 1 July this year.
“We expect interest in 75 Hindmarsh Square at around the $40m mark, which will appeal to private investors, syndicates and some REITs.”
Expressions of Interest close March 12, 2020.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
