Mirvac Sells Half Stake in Heritage Locomotive Workshop

Super fund Sunsuper has parted with $231 million for a half stake in Mirvac’s recently completed Locomotive Workshop redevelopment in Sydney.

The deal, representing a 4.7 per cent cap rate, similar to an investment yield, comes shortly after SunSuper decided to shift its commercial property mandate from AMP Capital to Mirvac—an agreement that is yet to be finalised.

Mirvac’s $450-million heritage conversion of the Locomotive Workshop in Eveleigh is part of the Australian Technology Park precinct on the edge of Redfern and encompasses 31,000sq m of A-grade office and retail space.

It comprises a two-storey sandstone and brick structure and has heritage features including cast iron columns, wrought iron trusses and heritage artefacts.

The workshop’s tenants include fintech company Quantium, Post Op Group and OMG, a major marketing company, while The Grounds and Romeo’s IGA are two of the key retailers.

Adam Woodward, James Mitchell and James Barber of Colliers International, alongside Ben Schubert, Paul Roberts and Graeme Russell of Knight Frank, advised Mirvac on the deal.

Woodward said the “groundscraper” site had become a highly sought-after office and retail location, as evidenced by 97 per cent of the building being leased prior to its completion in May.

“The Locomotive Workshop offers a rare commercial opportunity in Sydney’s burgeoning fringe office market,” Woodward said.

“The site is a unique heritage conversion offering world-class amenities and located in the Central-to-Eveleigh rail corridor, which will benefit from the NSW government’s $10.4-billion rail infrastructure investment that is currently under way.”

The broader 13.9ha technology park is owned by a Mirvac-led consortium of AMP Capital, Sunsuper and Centuria Property Funds.

The precinct is 5km from the Sydney CBD and a short walk to Redfern train station.

It also includes public artworks by local artists, public and shared spaces, a village green and community orientated sports facilities such as basketball, tennis and futsal courts, and a proposed scooter park.

Schubert said demand for Sydney’s fringe office investments has remained strong in spite of the pandemic.

“Investors are looking to acquire assets in emerging locations that are set to benefit from infrastructure improvements and that are known to attract tenants from the growing technology sector and wider creative industries,” he said.

Sunsuper, among the country’s largest and fastest-growing super funds with $85 billion under management, is no stranger to South Eveleigh where it already has a third stake in the 55,000sq m Commonwealth Bank complex, The Foundry.

The deal follows two major divestments this month for Mirvac, exiting a Sydney mall and a co-investment in a hotel portfolio.

In a similar deal, British investor M&G Real Estate bought Mirvac’s blue-chip EY Centre in the Sydney CBD for $575 million, taking a 50 per cent stake.

That transaction was struck on a tighter 4.1 per cent capitalisation rate.

The developer is also looking to divest its holding in the Tramsheds in Sydney’s Harold Park—a similarly positioned 6100sq m heritage reconversion.