The NSW Government has paid a premium to acquire a B-grade office building at 39 Martin Place from vendors DEXUS Property Group and DEXUS Wholesale Property Fund.
The property has been purchased for a total of $332 million which represents a 49 per cent premium over the property’s June 2016 book value of $222.6 million. The property is one of the most expensive acquisitions so for by the NSW Government for the planned Sydney Metro rail system. The property was acquired under the compulsory acquisition rules, and DEXUS Property Group Chief Executive noted that the “negotiations were between a willing buyer and a not so willing seller”. However, he also noted that DEXUS are strong supporters of the Metro project and “all the benefits that line will bring to the city”.
The government started the process of acquiring properties for the 15 kilometre Sydney Metro in November 2015 and so far has acquired about 150 properties, most of which are commercial properties. Other significant properties acquired for the Sydney Metro project include 175 Castlereagh purchased for $98 million in December 2015 and more recent acquisitions of 55 Hunter Street and 5 Elizabeth Street. The planned metro will run from Chatswood in the north to Sydenham in the south via the Sydney CBD.
According to Cityscope, 39 Martin Place, is a 22-story office building, with 20 levels of office space, two arcade retail levels and basement parking over two levels for approximately 68 cars, originally completed in 1972. The tower has a net lettable area of 16,431 sqm, which comprises 14,525 sqm office space and 1,816 sqm retail space. The tower has a NABERS Energy rating of 3.5 stars and is occupied by high-end jewelers Tiffany & Co on levels 14 and 17, a branch of St George bank in the retail arcade, Sydney Water on level 11, and LATAM Airlines Group on level 5. The NSW Government will take on management of the building. Demolition of the building is expected to happen by the end of 2017.
The vendors, DEXUS Property Group and DEXUS Wholesale Property Fund purchased the property for $143 million in December 2012. DEXUS Property Group is listed on the Australian Securities Exchange, while DEXUS