US fund manager Starwood Capital, in a joint venture with Arrow Capital Partners, have snapped up the Zenith office towers for $438.2 million, setting a record purchase in Sydney’s north shore suburb of Chatswood.
In a show of Sydney’s office market strength, the deal was completed at $685 per square metres per annum, the highest rate recorded in the Sydney suburb located 12 kilometres north of the CBD.
The vendors, Centuria and a private fund managed by BlackRock, listed the Chatswood towers in February this year with expectations of more than $400 million.
The sale comes only two years after Centuria and BlackRock purchased the office asset, at 821 Pacific Highway, for $279 million.
The vendors said they originally planned to hold the asset for a longer period, but due to buyer interest resulted in an “accelerated exit”.
Knight Frank’s Tyler Talbot and Ben Schubert and CBRE’s Michael Andrews and Scott-Gray Spencer brokered the deal.
The 21-level twin towers have full occupancy on a weighted average lease expiry of 4.3 years.
Centuria head of real estate and funds management Jason Huljich said ten offers were received for the asset.
“Reflecting the general strength of the market and Centuria and BlackRock's asset management strategy in enhancing the yield on the property,” Huljich said.
The A-grade office asset underwent a major refurbishment as part of the strategy to reposition the towers and increase rental returns.
“Tenant requirements have been evolving over the past 10-years, and that modern end-of-trip facilities are now seen as essential in any quality property, whether it is in the CBD or the suburban markets and certainly assists in creating stronger tenant demand,” Huljich said.
“When we bought The Zenith in 2016, market rents were on average $490 per sq m net per annum, and we have recently completed a deal at $685 per sq m net p.a., which is the highest rate ever recorded in Chatswood.”
The office complex has a net lettable area of 44,102sq m, 785 parking spaces, which spans a 7,990sq m site.
Centuria’s 50 per cent share of The Zenith is owned by investors in the single-asset, unlisted Centuria Zenith Fund, which will be wound up and proceeds distributed to investors, after the sale settles.
BlackRock’s interest was held in a private real estate fund that it manages on behalf of its investors.