Longhurst Group enters market with Edgecliff Centre buy
The Longhurst Group has picked up Sydney’s landmark Edgecliff Centre in a deal worth $138.75 million that positions the developer to overhaul the complex into a major mixed-use project.
The property, which comprises retail and office buildings at the gateway to Sydney’s affluent eastern suburbs, marks Longhurst’s maiden acquisition.
Longhurst, headed by former Mirvac executive Paolo Razza, says it is an opportunity too good to be missed.
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“This is a landmark building that is nowhere near realising the full potential of its location and views of the Sydney CBD and harbour,” he says.
Property circles were abuzz about the deal that was struck late on Friday as it will show a record 3.72% yield — exceptionally low even for a major retail asset in Sydney, reflecting both the heat in the market and the site’s development potential.
Razza says Longhurst’s winning offer reflects the highly competitive nature of bidding and the enormous potential to add and extract value.
The company’s bid was led by another former Mirvac executive, Paul Apostoles, who, along with Razza, has driven some of Sydney’s most significant urban regeneration projects, including Green Square Town Centre, Harold Park and the newly opened Tramsheds.
Longhurst, backed by local investors, is chasing more complex, mixed-use sites on the eastern seaboard.
“We have been strategic with our first purchase and waited for the right site to come along, and we will do that again,” Razza says. “This asset is typical of what we are looking for. It is complicated and will require patience and persistence but over time we will be able to add significant value to it.”
The deal on the 10,845sqm mixed-use property, with a neighbourhood shopping centre and a six-storey office building, is seen as another sign of the heat in the Sydney property market.
The vendor, Lee Tai Enterprises, had hoped for more than $120 million when it went to market in July. The final price almost touches the level at which the listed Abacus Property Group previously held an option to buy the property but was unable to find the backers.
JLL’s James Aroney, Simon Rooney and Steven Tsang and Knight Frank’s Dominic Ong, John Bowie Wilson and James Parry marketed the property.
This is a landmark building that is nowhere near realising the full potential of its location and views of the Sydney CBD and harbour
JLL, which introduced the buyer, says bidders were attracted by the significant value-add potential, with Aroney noting the potential for a conversion to residential use after it was identified as an opportunities site in a 2009 study. Luxury apartments sell for $25,000 to $30,000 a square metre in the area, making a conversion a potentially lucrative exercise. The office tower offers panoramic views, which would warrant a premium if turned into apartments.
Longhurst is cautious, while Razza says it is “premature to talk about our plans” but emphasises the building’s natural attributes and location adjacent Edgecliff station.
“An important part of any future plans will be to explore ways to integrate the adjacent East Point shopping centre, which was originally developed by Mirvac in the early 1980s and is still owned by the family of Mirvac co-founder Henry Pollack,” he says.
The centre offered a unique redevelopment opportunity, JLL’s Rooney says, adding such properties are “once in a cycle opportunities and the market response was overwhelming”.
Ong says the property attracted deep interest from eastern suburbs and international investors, noting a tight contest had driven the final pricing.
This article originally appeared on www.theaustralian.com.au/property.