Telstra puts Pitt Street Telephone Exchange on the market

Telstra has put a landmark CBD tower on the market as part of its ambitious $2 billion asset sales program.

The 16-storey tower at 76-78 Pitt Street, Sydney, formally came up for sale on Monday, with the telco expecting to fetch anywhere between $270m and $300m from the transaction.

Part of the sale of the telephone exchange is a triple net leaseback, which will allow Telstra to use the 1507sqm site for the next 10 years.

Described in marketing material as “the most exciting investment opportunity to come to the Australian market” in 2020, the landholding is being offered via an expressions of interest campaign through Knight Frank.

“This is a rare opportunity that has not been seen in a long time in the CBD,” Knight Frank head of institutional sales Paul Roberts said.

It also allows investors the potential to redevelop the site into a modern office block at the conclusion of the 10-year sale and leaseback period.

Roberts said despite COVID-19 causing some uncertainty in the short term for the office block market, he expects strong interest for this particular property.

The tower has 16 storeys and 23,473sqm of internal space.

The listing allows the new owner to redevelop the site at the conclusion of the leaseback period.

“Secure income for the next decade will make this asset highly sought after by both the domestic and international markets,” he said.

“Having rear lane access to Castlereagh Street will also increase the appeal for someone looking to redevelop the site.”

Roberts added the offering was unique for the market, as it allows a party to negotiate the sale price and the rent with the same party.

The listing is the latest property Telstra is offloading as part of its $2 billion asset sales program. First flagged by CEO Andy Penn in 2018, it is aimed at improving the company’s balance sheet.

The property offers city views.

The scheme has seen Telstra sell its Melbourne headquarters last year for $830m and a further $417m from the sale of a data centre in Victoria in August.

Telstra’s exchange tower has 23,473sqm of gross floor area and features a data centre, office space, a broadcast centre and a telephone exchange.

Expressions of interest on the Pitt Street address is currently scheduled to close on October 29.

This article from the Daily Telegraph originally appeared as “Telstra to sell Sydney Pitt Street Telephone Exchange with leaseback option”.