Sydney’s Bakehouse Quarter sells for $380m
An offshore group has swooped on the Bakehouse Quarter in Sydney’s inner west with the deal rumoured to have been struck at $380 million as major sites with future residential potential remain hot property across the city.
A wave of purchases by Chinese-backed groups, including JQZ and Yuhu, are resetting the value of sites in suburbs benefiting from infrastructure spending, despite prudential regulators tightening finance to apartment developers and buyers.
The Bakehouse Quarter, set around the refurbished former Arnott’s Biscuits factory in North Strathfield, has been built up into a major commercial and retail development, but there are already plans for up to 1000 apartments.
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The property is being sold by the unlisted Kirela Development Unit Trust and is managed by listed group BlackWall.
The separately listed BlackWall Property Trust, which has a 14.4% stake in the Bakehouse Quarter, said a buyer had paid a non-refundable option fee of $38 million, effectively confirming an option agreement that was foreshadowed last year.
The option is exercisable between July 1 and August 31, 2018, followed by a five-month settlement term.
BlackWall said last August there was a “possibility” the Bakehouse Quarter would be sold after it received an unsolicited offer. Under that agreement the property would be sold in stages over eight years, with the first tranche to settled in March this year. That deal lapsed and BlackWall had wanted to secure approvals and undertake the residential development in a joint venture or sell off the development sites it created.
But owners of the site, which has been gradually built up over the last two decades, decided to sell into the premium bid. It marks a step up from two years ago when the Bakehouse Quarter was marketed and expectations were at $270 million to $300 million.
The site of the former Arnott’s Biscuits factory was picked up by property identities Seph Glew and Paul Tresidder in 1997. They led the Kirela trust as it developed the property and, after several corporate changes over the past two decades, transformed what was once 60,000sqm of empty factory buildings into a busy mixed use precinct.
The 6.39ha site in North Strathfield has development potential. The town centre site has more than 17,400sqm of office space and 18,700sqm of retail and entertainment space, with further potential development potential. Existing tenants include Aldi Supermarket, Arnott’s, NRMA, Fitness First, Gloria Jeans, Subway and AMF Bowling.
The precinct is positioned to benefit from the NSW government’s WestConnex project and will also benefit from the overhaul of Parramatta Road and proposed Parramatta light rail, with planners recommending a dramatic lift in the site’s floor to space ratio.
The BlackWall trust held its interest based on a value for the Bakehouse Quarter of $270m last year but the sale will bolster its valuation. The vehicle said the deal added $3.75 million to the carrying value of its holding in the Kirela trust and boosted its net tangible assets by 6c per unit from $1.27 to $1.33. If the call option is exercised, the value of Kirela units held will rise by a further $12.25 million, adding 18c per unit to the BlackWall-run fund’s net tangible assets.
One of BlackWall’s subsidiaries, WOTSO WorkSpace, is a tenant at the Bakehouse Quarter, and will keep expanding there to build up to 7000sqm. “The net effect of the Bakehouse Quarter transaction, whether the option is exercised or not, is expected to be positive for both (the company and the trust),” BlackWall says.
This article originally appeared on www.theaustralian.com.au/property.
