By: Alison Cheung
A Hong Kong-based real estate funds manager has acquired the historic Accountants House in Sydney’s The Rocks for $21.05 million.
Terraform Capital purchased the leasehold interest in the six-storey commercial building at 117 Harrington Street on a 5.25-per-cent yield.
The state heritage-listed commercial building is held on a 99-year lease from the Sydney Harbour Foreshore Authority, with 86 years remaining on the lease.
The property, which generates a net passing income of $1.1 million, is fully leased to clients including CCUBE Financial, Iris Sydney, Artazan Property Group and real estate investment manager Sumner Capital, the vendor of the asset.
The building has a net lettable area of 1402 square metres on a 379-square-metre site.
Kevin Cheng, Terraform Capital’s head of funds management, said 117 Harrington Street was an appealing property for the company due to its heritage and location.
“It’s a rare opportunity to acquire a heritage building in the heart of Sydney CBD, so close to the new light rail and Circular Quay. The property is fully occupied with strong income and our investors are also taking advantage of the low Australian dollar and low interest rate environment in Australia,” he told Commercial Real Estate.
Mr Cheng said there were no immediate plans to convert the building into a residential development or hotel “in the foreseeable future”.
“We will keep it as a core investment given the strong commercial market in Sydney.”
The acquisition of 117 Harrington Street increases Terraform Capital’s number of assets under management in Sydney to five, with a combined value of more than $500 million.
The fund manager’s other assets in Sydney are 171 Clarence Street, 400 Kent Street, 13a Union Street in Pyrmont and The Octagon at 110 George Street, Parramatta.
The company also operates coworking, co-living and food-and-beverage businesses in Hong Kong.
The leasehold interest in 117 Harrington Street is the last Australian property for one of Sumner Capital’s Swiss-based clients, which bought the asset for $13 million in 2013.
CBRE selling agents Kenny Duncanson and Harry George received 200 inquiries about the property.
“The high yielding nature of leasehold and heritage investments underpinned the high level of interest in the campaign, as did the building’s strong investment fundamentals and diverse tenancy mix,” Mr George said, adding that the property’s location was another drawcard.
Mr. Duncanson noted that the building accommodated an increasing tenant demand for creative office environments.
“The building also offers rental upside, with the current lease expiries occurring after the delivery of the Sydney Light Rail and in time to capture tenant demand off the back of new premium grade towers such as Quay Quarter Tower and Circular Quay Tower,” he said.
Accountants House is made up of two commercial buildings which were amalgamated in 2007 during its refurbishment. It comprises the original 117 Harrington Street, constructed in 1914, and the three-storey 120 Gloucester Street, built in 1912.
It is named Accountants House as the Australian Society of Accountants bought and occupied the building in 1952 before vacating in 1971.
The Sydney Harbour Foreshore Authority took control of the building in 2004.