Chinese investors lead race for two Sydney towers

The office building at 160 Sussex St in Sydney.
The office building at 160 Sussex St in Sydney.

Chinese investors are targeting more towers in the heart of Sydney, with Hong Kong groups setting a cracking pace and mainland groups also in the mix, striking two property deals with a combined value of about $450 million.

The interest of the Chinese groups also affirms the strength of demand for major income-producing assets even as appetite for riskier apartment plays falls away.

In one of the latest moves, ­Chinese company Acer is circling a B-grade office building in the western corridor of the CBD from the private Burcher Property Group in a deal worth about $95 million.

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Graeme Russell, Simon Fenn and Ben Azar of Savills and Vince Kernahan, Tom O’Neill and James Barber of Colliers International are handling the sale but ­declined to comment.

The tower, at 160 Sussex St, is a renovated 15-storey office building comprising 8269sqm of net lettable space on an 853sqm site.

The tower, overlooking Darling Harbour, has a weighted average lease expiry of 3.26 years.

The property is now fully leased, with major tenant ­Education Centre of Australia ­occupying 46% of the ­building.

Other tenants include Rankin Ellison Lawyers, Fortinet Inter­national, Dual Australia, Trippas White Group, Turner Freeman Lawyers and Health Care ­Australia.

Burcher bought the Sussex Street asset for $52.7 million from JPMorgan/Aviva Investors in late 2015, with that deal settling in January last year, although the price was later adjusted.

Another key offering, 231 ­Elizabeth St, which is being sold by Singapore-based Chinese investment house Bright Ruby, is now being assessed by a Chinese investor in a near $350 million deal.

The listed Charter Hall was up against at least two deep-pocketed Chinese developers, with the ­acquisitive Yuhu Group previously believed to be leading the charge.

The Hong Kong-based Mah family had also targeted the ­building. However, sources pointed to others including ­Chinese group Dayfull, although the outcome is not yet clear.

The corner building comprises 15 levels of office space, two ground-floor retail areas and two basement levels, but holds significant redevelopment potential if tenant Telstra leaves.

The telco is on a staggered lease and there is uncertainty about whether it will stay in the tower — which would suit the local office groups chasing the building — or if it will exit, as the developers may hope.

That sale is being handled by Colliers International and JLL but they declined to comment.

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