Stirling Property Partners has offloaded a Liverpool CBD tower block for a reported $55 million.
The Inner West Council has bought the B-grade office building at 203 Northumberland Street.
It was marketed by Colliers late last year after Stirling undertook a refurbishment program and presented with 7290sq m NLA and a 4.7-year WALE.
The council engaged Ernst and Young as its strategic property adviser and developed a set of criteria to procure investment properties to secure an ongoing income stream, a council spokesperson said.
“This property fitted these criteria—it is part of the council’s strategy to improve its long term financial position and ensure the Inner West’s financial sustainability.”
Liverpool had been identified by vendor Stirling Property Partners as a target investment “which will benefit from significant government investment” including Western Sydney International Airport and upgrades to Liverpool Hospital.
Stirling acquired the site for $46.8 million in September 2019 and invested in infrastructure improvements, according to head of property Scott Girard.
“We replaced lifts and air conditioning throughout the building and did quite a bit of refurbishment on the floors for repositioning, and managed to get it to 4.5-Star NABERS Energy rating,” he said.
Stirling also subdivided the land to create a second mixed-use opportunity on the site.
“We subdivided an on-grade car park which was attached to the title of the office building and really, the value of the parts were greater than the whole,” Girard said.
“We were able to realise value uplift through selling the on-grade parking as a mixed use development.”
After holding onto the site over the pandemic and working on the upgrades, the sale to the Inner West Council provied a strong result for Stirling.
“It performed very well—rents increased by 27 per cent over our investment period, and the average incentive across the building was 18 per cent compared to metro markets at 40 per cent,” Girard said.
A so-called ‘flight to quality’ has led tenants to focus on A-grade and Premium office space, leading many owners of B-grade spaces to look to upcycling.
