SA Government To Offload $200m of State-Owned Property

The South Australian government is set put three of its most important buildings on the market in early 2015, with some tipping the sale could attract up to $200 million.

The Australian reports that

JLL is handling the sale, which includes 10,000 square metres of prime CBD land, situated between Victoria Square, Wakefield Street, Gawler Place and Flinders Street.

Together, the three buildings total more than 55,000 square metres. The buildings up for sale are: the State Administration building, which houses the Premier; the Education Department headquarters on Flinders Street; and Wakefield House, which houses the offices of the Chief Information Officer and Arts SA.

The precinct sale forms part of a government property sell-off worth up to $250 million, but South Australian Treasurer Tom Koutsantonis has said that the sale will only go ahead if the price is right.

Adelaide’s strong demand for properties from major institutions – such as Lend Lease’s purchase of a $175 million portfolio of assets earlier this year – could support pricing expectations.

The government is already seeing results on the other side of Gawler Place, with two connected SA Police buildings under contract for more than $35 million, while expressions of interest in two other government-owned properties are set to close next week.

It has been projected that the 575-bay Union Street Car Park in East End could fetch bids of up to $20 million, while a 4,500 square metre development site on Penny Place, adjacent to the Federal Court building, has been valued at $8 million.

The Australian has learnt from industry sources that under a sale and leaseback agreement for the State Administration Centre precinct, the state government would be forced to make annual rental payments of up to $15 million.

This figure is on top of the $2.8 million in annual rent that the government will pay under a new 12-year lease for the SA Police buildings.

Opposition Treasury spokesman Rob Lucas has said that the administration centre precinct should only be sold if interest savings on debt reductions outweighed the ongoing rental costs.

Mr Koutsantonis said that advice from the market was that long-term investors have a strong appetite for the types of properties the government is selling.

Property Council SA executive director Daniel Gannon welcomes the sale, “The State Administration Centre precinct is a great parcel of property to put out to market.”

Image source: News.com.au