Trust leads Century north to 107 Mount Street

Author: Kathryn House
Date: 14/12/2005
Publication: The Financial Review
Section: Property

The expanding Century Funds Management is negotiating to buy the old George Patterson headquarters in North Sydney as it prepares to launch a $200 million unlisted property trust.

While none of the parties involved in the deal were prepared to comment, The Australian Financial Review has learnt that Century is in exclusive negotiations to buy the North Sydney building for an estimated $36 million.

It is a small uplift on the $32 million paid by the then James Fielding Group, now Mirvac, when it bought the 107 Mount Street building four years ago.

But it has not been an easy road. James Fielding bought the building vacant just as the North Sydney office leasing market went into decline, and it took years to get the property fully occupied. Now, with just one office suite left to lease, Mirvac has elected to on-sell to Century.

Chesterton International's Bevan Kenny is believed to have brokered the deal offmarket, but he declined to comment.

The transaction comes as Century scours for properties to seed a proposed open-ended fund, which is expected to hold a mix of direct assets and listed property securities.

The trust plans were first flagged in April, following Century's merger with boutique funds management group Bankminster Property.

Century chief executive John McBain would not discuss 107 Mount Street, although he confirmed the group was still on track to launch a major new fund.

"Timing just has to be dependent on a few stars coming into alignment," Mr McBain said.

It has been an active period for the group, which merged with Bankminster late last year to boost property funds under management to about $400 million.

After the merger, Mr McBain said the enlarged group had its eye on larger transactions, which ranged between $10 million and $50 million.

The 107 Mount Street deal is being struck on a yield of just under 8 per cent and would be one of the biggest transactions yet for Century.

It follows a run of major investment sales in North Sydney , among them the $54.5 million sale to MacarthurCook of 181 Miller Street. Other deals in the area pending include a $50 million sale to Heathley Ltd of the nearby 99 Mount Street.

The 107 Mount Street property has had several owners in recent years, one being a consortium involving Seven Network boss Kerry Stokes.

The Stokes consortium bought the building in 2000 for $25.5 million after lining up Open Telecommunications as a replacement tenant for George Patterson.

But OpenTel walked away from the negotiations at the 11th hour and the consortium ended up selling the 6750 square metre property to James Fielding with no alternate occupier in place.

The building is now all but fully leased to a range of tenants, among them Interwoven, Orient Overseas Container Lines and car maker SsangYong.

Dowload PDF

Back