Quarter stake available in Sydney’s Governor Phillip and Governor Macquarie towers

Commercial property searches fell last week, but remain well up on a year ago.
Commercial property searches fell last week, but remain well up on a year ago.

Listed property giant GPT has joined the ranks of office block sellers, putting a one quarter stake in Sydney’s landmark Governor Phillip and Governor Macquarie Towers on the block.

The move shows the coronavirus crisis is unlocking the city‘s best towers but at the same time lower grade assets are struggling to attract buyers.

The entire complex is worth about $2.4bn and the sale will be keenly watched as a guide to premium office values as landlords also attempt to entice workers back to their desks.

It is the largest building complex to be put in play in the wake of the pandemic hitting, although China’s sovereign wealth fund has already swooped on a half interest in Grosvenor Place in a $1bn play.

GPT’s interest is valued at about $586m and will first be offered to co-owners, a Lendlease managed office fund, and then listed rival Dexus, with ambitions of trading around book value.

The overall complex, 1 Farrer Place, is seen as Sydney’s pre-eminent office building and sports expansive harbour views. The complex consists of 84,900sq m of premium grade accommodation.

It comprises the Governor Phillip Tower, a 64-level office building, and Governor Macquarie Tower, a 41-level office building. It also includes the Phillip Street Terraces, being five restored historic terraces and nine levels of basement carparking for more than 654 cars.

GPT chief executive Bob Johnston said Farrer Place was “one of Australia’s most iconic office assets attracting high quality tenants. It is rare for opportunities of this quality to be offered to the market and we expect it will be well sought-after by both domestic and off- shore investors”.

GPT wants to have control over its remaining office assets by owning at least a 50 per cent stake in buildings, with management rights.

Should a sale be successful, GPT expects to be able to reinvest the proceeds into new opportunities including its logistics development pipeline.

The building‘s key tenants include law firms King & Wood Mallesons and Minter Ellison.

Some analysts questioned the timing of the sale given investment markets were still fragile and borders were closed, an impediment to international buyers.

“Given GPT’s sound balance sheet, time frame of the development pipeline and certainty of income from the high quality 1 Farrer Place asset, we question the need to divest the asset at this point in time,” Macquarie Equities said.

But property players said the best buildings were attracting good bidding with other towers in the city also garnering bids.

Cbus Property has at least three groups contending for a stake in 1 Bligh Street. It is selling a one third interest in the tower and Dexus, which owns the other two-thirds of the building alongside its wholesale fund, is a serious contender.

Other buildings are being offered across Sydney. Investa Property Group is selling about $900m worth of office tower assets, including a half-interest in 135 King Street.

Also on the block is a half-interest in 101 Miller Street and the Greenwood Plaza shopping centre being offered by fund manager Nuveen.

The sales have been keenly watched for any cracks in the office property market.

This article originally appeared on www.theaustralian.com.au/property.