China Venture lose ground on Crows Nest Strata Play
In the hotly contested Crows Nest market, China Venture are lucky to have sold 270 Pacific Highway for $60m having acquired each of the 45 strata titles for a similar price in the hopes of consolidating the site for a major redevelopment.
The investors sitting behind the investment are likely to have lost money after stamp duty acquisitions costs, interest and holding costs.
Despite being only 300 metres from the Crows Nest Metro station, the proposed St Leonard's / Crows Nest precinct plans will limit redevelopment of the site to just 8 storeys, meaning that redevelopment of the existing 6 storey building is not viable in the current market.
The property sits on a 3,793sqm site and contains 6,526sqm of lettable area across the ground floor retail and 4 levels of office space. The vendor had allowed the tenants in the building to vacate or holdover on lower rentals whilst plans for a redevelopment were prepared. As a result the property in a relatively poor leasehold condition, with 14% vacancy and a further 33% on monthly tenancies at well below market rents. At the purchase price, the yield on the asset is 1.7%, whilst the fully let market rent is sub 5%.
The purchaser will likely re-work the commercial office leases and add value to the asset as is with any further redevelopment plans likely to be deferred for 5-10 years.
The transaction was marketed by Knight Frank and CBRE.