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Ashe Morgan sells one and buys two

Property Markets / Transactions

Australia / Sydney

Mar 14 2018

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In a flurry of pre-Christmas activity last year, real estate investment and advisory group Ashe Morgan followed the sale of its mixed use asset in Fortitude Valley, Brisbane and its acquisition of two commercial office towers in the Brisbane CBD, with the acquisition of a premium commercial office asset in the centre of the Sydney CBD.

The sale of the Duncan Street car park and adjoining commercial office building in Fortitude Valley, (formerly part of their Valley Heart Portfolio), was completed in late November for $64 million [read the full story here].

The group continues to hold the recently refurbished TC Bernie Building, which provides industrially inspired commercial office space above ground floor retail.

November 2017 also saw the acquisition of the State Heath and Forestry House buildings at 147-163 Charlotte Street and 146-160 Mary Street in the Brisbane CBD. The combined office portfolio of 26,600sqm, purchased for $66 million, is now known as Midtown Centre and an application has been lodged with Brisbane City Council for the refurbishment of the property to A Grade standard. The assets were acquired with equity and no bank debt [read the full story here].

As a final transaction for 2017, Ashe Morgan acquired 9 Hunter Street, Sydney, a 17 level commercial freehold stratum providing 15,548sqm of quality office accommodation. Built in 1983 and extensively refurbished in 2013 and 2016, the building is 98% occupied with a healthy and diverse tenancy mix from various industries including finance, legal, IT and online solutions. The building has a WALE of 2.8 years. 

“We see immediate value because the current average gross rents are $780 per sqm with comparative market rentals in Sydney’s core reflecting rates between $850 and $1,000 per sqm,” says Principal Michael Rothner. 

“The purchase price reflects a rate of just under $13,000 per sqm with other similarly located assets in the market trading between $18,000 and $20,000 per sqm”.

“The base case investment scenario provides for a double-digit IRR and an equity multiple over 1.5x. The returns are supported through managing the building in an efficient manner and ensuring the vacancy and renewals are leased in line with improving market rents,” he says.

Positioned in the centre of Sydney’s Core Commercial Precinct, the building is ideally positioned between Martin Place and Circular Quay and is joined by an underground retail connection to the Wynyard train station, which is currently being upgraded to become a state of the art transport hub.

The property is surrounded by essential food, shopping, and entertainment amenity, and the area is expected to continue to transform with a number of major infrastructure projects in the direct vicinity of 9 Hunter Street currently being completed. The property will benefit in the future from the $2.1billion light rail system on George Street, the $220million pedestrianisation of George Street between Hunter and Bathurst Streets, the $100million upgrade of the Wynyard Train Station, the $360million Barangaroo Walk access tunnel and the $11.5billion world-class Sydney Metro Line.

In addition to these government projects, there are also a number of private sector projects currently underway in the immediate precinct, including commercial office, hotel and residential developments which will help transform this part of the Sydney CBD into a crucial link between Barangaroo and Martin Place. These projects are expected to revitalise and re-rate the location and improve the value of 9 Hunter Street and other existing buildings in the area.



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