UBS closes deal to buy North Sydney office tower

Investment bank UBS has given the office market a shot in the arm with the near-$400m purchase of a North Sydney office block on behalf of a wealthy ­European client.

The sale by Asian warehouse and property giant ESR is another marker for offices in the area, with activity picking up ahead of a new metro station opening.

A series of big-ticket office blocks are up for grabs, but deals have been slowed by tougher conditions in the property market and higher interest rates.

UBS’s asset management arm emerged as the leading suitor on the office tower at 73 Miller St in June. The deal could help set the scene for a big end to the year as vendors appear willing to trade larger assets.

Some property groups are also selling assets to fund their development pipelines. In the case of ESR, it has successfully launched a series of industrial property funds and is opening up new facilities.

The Swiss-based Partners Group is also a winner from the play by UBS-AM’s Real Estate & Private Markets as it owned much of the equity position in the tower.

The tower was built in the 1990s, but ESR has spent $60m on upgrading the property. Picture: Supplied by ESR

The sale was handled by agencies JLL and Knight Frank and is part of a move by ESR to sell off a portfolio of offices that it picked up when it took over Propertylink.

Propertylink had stakes in the buildings but was mainly managing them for funds clients. ESR also sold down a further series of buildings on Sydney’s north shore, with the smaller assets in North Ryde, Lane Cove and Macquarie Park also mainly finding buyers.

The tower at 73 Miller St, on a prominent corner location adjacent to North Sydney railway station, will also benefit from the new metro.

It was built in the 1990s, but ESR undertook a $60m capital revamp that transformed it into a top-quality A-grade office building with ground floor retail and 13 levels of office space.

ESR Australia chief executive Phil Pearce said the building was acquired with a clear strategy of bringing it up to premium standard, and he said this had been achieved.

This article was first published on www.theaustralian.com.au.