Quintessential Equity Launches New Acquisition Investment Opportunity at 1 Margaret Street, Sydney
Quintessential Equity is excited to launch a new investment opportunity in the acquisition of 1 Margaret Street, Sydney.
Investors are now invited to secure the stunning Sydney CBD A-Grade building, which has been negotiated well below replacement cost value, offering significant entrapped value ready to be unlocked.
Avi Gordon, General Manager of Investor Capital at Quintessential Equity said the most recent independent valuation and replacement cost indicate a very strong platform for the business to leverage unique, in-house expertise to extract value for investors.
“We believe that securing this opportunity at the low price point we have negotiated represents exceptional buying, and I would encourage investors to take advantage of this rare opportunity,” he said.
“The property acquisition price of approximately $207 million is substantially below its replacement cost of circa $424 million, including land value, and 21 per cent below the vendor’s most recent independent valuation of $373 million.
“With capital preservation always at the forefront of our mind, we have adopted conservative assumptions in our financial modelling and believe this acquisition is a very attractive investment opportunity.”
Within the Sydney CBD, only three 100 per cent prime grade assets have traded in the last five years, and this is the first time 1 Margaret Street has transacted for 25 years.
The property has a current rental occupancy of 95.1 per cent, with a WALE of 2.1 years by income.
“A-Grade buildings such as this, within core locations, are best placed to attract and retain tenants in the current market, as businesses seek higher-quality workplaces and amenity to encourage employees to return to the office,” Mr Gordon said.
“This property has many standout features and inherent value, with the most visible being its prime corner location with frontage of 160 metres to Clarence, Margaret and Kent Streets, connecting the financial services district and Barangaroo.
“The property has a passing yield of 6.7 per cent and fully leased yield of 7.2 per cent, significantly higher than comparable sales over the last 24 months, which have reflected yields between 4.1 and 5.6 per cent.
“Capital expenditure allowance of approximately $70 million has been budgeted to fully regenerate the property and enhance its leasing competitiveness.”
Proposed works include major aesthetic enhancements, a full repositioning of the ground floor plane, delivery of the new podium to Clarence Street, an upgrade to the end-of-trip facilities, major upgrades to the building plant and services, and providing premium modern amenities including touchless bathrooms and destination control lifts.
Maintaining and enhancing the building’s strong environmental credentials, currently a 5.5-star NABERS Energy rating and a 5.5-star NABERS Water rating, will be particularly important in attracting strong tenant covenants, so we have a comprehensive ESG strategy planned, including transitioning the Property to fully electric.
The acquisition of 1 Margaret Street requires approximately $207 million of investor equity, of which the current fund Quintessential Equity Master Fund No.3 will invest its remaining $70 million of committed funds.
The Directors of Quintessential Equity will invest a minimum of $10M into this new opportunity, subject to availability.
The opportunity is now open for new investors to offer the additional $137M required for the acquisition.
The expected payment for an investment in the Fund will be required by 1 June 2023, to facilitate deployment into the acquisition of 1 Margaret Street.