Dexus Sells 201 Miller Street North Sydney to recycle into Development

Dexus have confirmed the sale of 201 Miller Street North Sydney for $155m as it continues to recycle out of B Grade office assets.

The 14,600 square metre B-grade office building is located near North Sydney’s largest retail precinct. The building is home to major occupiers Nestle Australia, Wipro Ltd, CSL Australia, Shell Energy and Wilson Parking. As at 29 October 2021, the property was 84% occupied with a weighted average lease expiry of 1.9 years.

Dexus held a 50% interest in the property via the Dexus Office Partnership, a joint venture formed with CPPIB in 2013 to take control of the Commonwealth Property Office Fund, then managed by Colonial First State. 201 Miller Street was one of the assets in the Fund and was held on a book value at the time of $74.1m (for 100%). Dexus currently hold their interest at $80m, reflecting a 5.5% cap rate.

Dexus Chief Investment Officer, Ross Du Vernet said: “This transaction continues our strategy of selective asset recycling and reinvesting into higher returning opportunities, while realising value for both Dexus and our Dexus Office Partner.”

The property has a net passing income of $8,871,642 p.a and a fully leased net income of 11,052,060 p.a. The sale price therefore reflecting a passing yield of 5.7% and a fully let yield of 7.1%.

The sale was the result of an on-market sales campaign run by Knight Frank and CBRE. Settlement is expected in mid-December 2021.

The property is situated 50 metres from, the soon to be completed, North Sydney Metro station and forms part of “Site B” in the Ward Street development precinct. Also forming “Site B” is 56 Berry Street (also owned by Dexus) along with sites owned by the Council as part of the Ward St Car Park.

The whole of Site B is earmarked for a Premium Grade commercial tower with a Retail podium incorporating a Knowledge & Cultural Hub. The proposed tower that can sit behind 201 Miller Street could accommodate 87,500sqm of NLA in a 57 storey structure.

Having recently completed the development of 100 Mount Street in North Sydney, Dexus will be keen to progress plans for the development of Site B.

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About Warwick Petschack

Warwick has over 25 years of property investment and management experience. Principally responsible as Managing Director for Capital Management Australia and Joint Managing Director for Chauvel Capital Partners and Editor of Australian Property Markets News.

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