ESR and Partners Group Sell North Sydney Office Block to UBS for $253M

ESR has closed the sale of its office tower at 73 Miller Street in North Sydney for A$400 million ($253 million), as the industrial specialist looks to unload pieces of its Australia-based Propertylink portfolio.

Investment banking giant UBS purchased the 13-storey office block from Hong Kong-listed ESR and Partners Group of Switzerland on behalf of a client, according to the sellers’ agents at JLL and Knight Frank.

ESR had taken ownership of the 1990s-era building after buying out real estate investment manager Propertylink in 2018 in a deal that valued the Australian firm at A$723.4 million. The revamped property boasts 19,114 square metres (205,741 square feet) of net lettable area with large 1,720 square metre floorplates and panoramic views of the Sydney Harbour.

“Following a A$60 million refurbishment and featuring an exceptional tenant profile, secure income stream and best-in-class ESG credentials, 73 Miller Street presents as new and is arguably the best A-grade asset in North Sydney,” Kate Low, JLL’s senior director for international capital in Australia, said Monday in a LinkedIn post.

North Sydney Connectivity

The brokers noted that opportunities of 73 Miller Street’s calibre are rarely presented in North Sydney, which is the northern extension of Sydney’s central business district. The property sits one minute by foot from the North Sydney railway station and six minutes from the future Victoria Cross rapid transit station.

The building’s tenants include electronics giant Sony, trading platform Axi, billboard provider OOH Media and engineering firms Aurecon and Taylor Thomson Whitting. TTW consulted on 73 Miller Street’s expansion from 14,672 to 19,114 square metres of space during the refurbishment, after which the company decided to lease an entire floor at the tower.

The weighted average lease expiry across tenants is roughly 7.1 years, and the property still has a 1,715 square metre floor available, according to an online listing.

ESR’s sustainability upgrades for the building included a rainwater catchment system on all balconies to service toilet flushing and irrigate green walls, a rooftop photovoltaic system to generate 79 kilowatt-hours of power a year, and LED lighting with a lifetime of 40,000-50,000 hours.

Former Fosun Trophy

At the A$400 million consideration, 73 Miller Street changed hands for roughly A$20,927 ($13,236) per square metre of net lettable area.

The building’s previous owners included Shanghai-based Fosun Property, which partnered with Propertylink to acquire the asset from Investa Property Group for A$116.5 million in 2015. At the time, the building was 100 percent leased to the government of New South Wales with four years to expiry.

In late 2017, the Chinese developer exited its investment via a deal valuing 73 Miller Street at A$150 million, with a Propertylink-led joint venture taking over the building, Bloomberg reported.