Stirling delivers compelling sale of Liverpool after 3 years of ownership

Stirling delivers compelling sale of Liverpool after 3 years of ownership

Three years after acquiring 203 Northumberland Street Liverpool, Stirling has completed its defined asset strategy of repositioning the Propertyandhas sold 203 Northumberland Street Liverpool,a year ahead of its planned investment schedule,returning investors a total return of 10.3% p.a. The selling price of $54.5 million, represents a capitalisation rateof 5.95% and $7,381 per sqm of NLA. 64 Bathurst Street, the adjoining lot, was sold in earlier 2022 for $7.9 million. The combined properties were originally acquired by the Fund, as one lot, for $46.7 million in September 2019.

Tenant demand for quality office assets in the Liverpool office market during and post Covid has been robust.Despite the impacts of Covid, Stirling increased average rents by 27% since acquisition with lease incentives of 18%, comparingfavourably with lease incentives in the Sydney CBDat 40% and significantly lower than other Sydney metropolitan markets with average net rents increasing by 20%.

Thepositive sale result reinforces the compelling investor attraction of well-positioned assets in established growth corridors, with quality tenants secured on long leases andstrong cash flow growth. This is reflected by the sub 6% capitalisation rate in a market where listed REITs are trading up to 35% below their NTAs and after the RBA increased the cash rate by 300 bps to December 2022.

Stirling’s asset repositioning strategy included an extensive capital expenditure program to significantly enhance amenity, re-leasing vacant space and increasing rents. Stirling’s strategy increased the passing rent in the building by 20% delivered a quality office building with the following investment attributes:

  • 95% occupancy with 4.7-year WALE
  • 4.5 Star NABERS energy rating
  • Diversified tenant mix with very strong lease covenants including NSW Department of Health, Ramsay Health, Commonwealth Bank, Westpac Bank, Brydens and Catholic Care
  • Income has a high degree of inflation protection with 34% of income having annual review mechanisms based on the greater of CPI or a fixed percentage

Stirling’s director and Head of Assets, Scott Girard, said that 203 Northumberland Street presented as oneof the best, if not the best, tenant profiles in the metropolitan Sydney office markets and that is reflected in the sale metrics.

The sales campaign was successfully conducted by John McCann from Colliers and Wally Scales of Knight Frank.

For further information on the Property or on Stirling Property Funds, please visit or email or phone 612 9232 3090.

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