Mirvac accepts dramatic discount for office
Mirvac has quietly sold a Parramatta CBD office for 42 per cent less than it paid in 2017 – a property cycle peak.
The $50 million result for 75 George Street (pictured, top) is also 31pc lower than the June, 2023, directors value ($72.8m) which assumed a six per cent capitalisation rate.
The buyer is speculated to be the owner of the neighbouring Roxy Arcade.
With the deal, sources say a plan to replace the 2669 sqm block, on the south west corner of Smith, with a much larger office project, are off the table.
Two months ago, we reported Australian Unity divested an unoccupied 14 storey office and five level 94 bay car park covering 3935 sqm for $80.5m – short of a June 30, 2024, valuation ($85.5m) and a dramatic drop on its value in December 2021 – $149.5m.
Like 75 George St, this parcel was earmarked longer term for a major office project.
Also in July, another predominantly vacant Parramatta CBD office – 60 Phillip St – traded for $21.5m.
Another office off the table
Mirvac paid RF Corval $86.3m for 75 George St (story continues below).
At the time, the bulk of the two-tower, six level, 9567 sqm office with 104 car parks was occupied.
Today (and for more than a year), some 8542 sqm is empty – the sector dented by falling tenant demand following the work from home trend.
Also affecting plans to redevelop the block are construction and borrowing costs – which have increased sharply since COVID.
The sale comes two months since we reported Mirvac sold a half stake in a recently renovated Sydney CBD office for $363.8m – a nine per cent discount to the then book value.
In Melbourne meanwhile, it recently divested the Optus Centre at 367 Collins St for $340m against a director valuation in late 2022 of $412.9m (and after another deal, worth a speculated $400m, last year, fell through).
Mirvac also this year took a hit selling the Australian Federal Police headquarters in the Victorian capital: after paying Sterling Global $122m for 383 La Trobe St in 2018 with plans for a 33 level, 44,000 sqm office, the property quietly sold for $88m to SP Setia for apartments.
Colliers’ John McCann marketed 75 George St.
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