Abacus, Blackstone trade Sydney office

Abacus is buying 77 Castlereagh Street for $250 million.

Abacus has exchanged contracts to purchase 77 Castlereagh Street from Blackstone.

The 11 level office on airspace over the Westfield Sydney Living Centre is trading for $250 million reflecting a four per cent fully let yield and 4.63pc capitalisation rate.

About 95pc of the 13,163 square metres lettable area is occupied; the Weighted Average Lease Expiry is 4.3 years.

The leasehold title expires in 2318.

Blackstone picked up the property from Scentre in 2019 – part of a $1.52b office portfolio which also included 85 Castlereagh St and 100 Market.

Early last year, the US fund manager sold 85 Castlereagh St to Link REIT for $683m.

Chasing higher rents

Abacus will settle on 77 Castlereagh St next month after which time its will be repositioned.

“Being integrated above Westfield Sydney, a world-class retail offering, the acquisition continues the Abacus theme of [buying] assets with good amenity and a clear path to income growth,” managing director Steven Sewell said.

“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,” he added.

Last renovated in 2010, the property is set to benefit from its proximity to the Martin Place Metro, due to open in three years (story continues below).

JLL’s Luke Billiau, Simon Storry, Mitch Noonan, Kate Low and James Holdsworth with McVay Real Estate’s Rob Sewell, Sam McVay, Dan McVay and Brock McDermott were the marketing agents.

The deal comes a fortnight since Blackstone paid $925m for a half stake in the city’s 44 level Grosvenor Place.

Last week the fund manager paid GIC $2.1 billion for a 49pc share of the Dexus Australian Logistics Trust.

Valuation uplift

In a statement, Abacus added it has re-appraised 49 investments – or 36pc of its portfolio by number.

“The preliminary draft valuations have resulted in a total estimated increase of $175m, being a five per cent increase,” it said.

“The unaudited valuations are expected to increase the group’s pro-forma net tangible assets (NTA) by circa $0.21 per security to $3.64, an increase of six pc on the 30 June, 2021, NTA.

The capitalisation rate for its self storage assets dropped 27 basis points to 5.47pc.

Abacus’ offices were appraised at 5.52pc compared to 5.58pc in June.

Subscribe to our newsletter at the bottom of this page.

Share or Recommend article

Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.