Boston group secures prized Sydney tower
Boston-based investment manager AEW Capital Management has swooped on a B-grade tower in Sydney’s Clarence St for about $169 million.
The group snapped up the office building from wholesale specialist Eureka Funds Management on a yield of close to 6%, reflecting its confidence in the city’s leasing market.
The tower at 55 Clarence St has a high tenant retention rate and rents are rising partly on the back of its proximity to Lend Lease’s South Barangaroo precinct.
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The deal shows the sharp escalation in rents is flowing through to asset prices. The private City Freeholds came close to buying the building after striking a deal with Eureka for about $148 million in May.
But that deal did not go ahead as the building required further works and City Freeholds last month bought a Pitt St tower from EG Fund Management for just over $52 million.
Works were completed on the Clarence Street tower and it was marketed in the second half by Colliers International’s Vince Kernahan and James Barber, as well as Richard Butler Property Advisors. The agents and parties declined to comment.
The US group’s AEW Global unit manages $US55.8 billion of real estate assets and securities on behalf of many of the world’s top institutional and private investors and it is a natural entrant to the local market.
It has more than 600 staff working from 13 offices in North America, Europe and Asia, where it operates from Hong Kong and Singapore.
The Clarence St tower has a weighted average lease expiry of 2.2 years and an average gross rent of more than $700 a square metre, when market rents of more than $850 a square metre are being set.
Originally completed in 1973, the 14,888sqm building has been extensively refurbished several times. Eureka bought the building in 2011 for $83.2 million for the Aria Property Fund.
This article originally appeared on www.theaustralian.com.au/property.