Propertylink has divested a North Sydney office tower for a 58% return

Propertylink Group (ASX:PLG) has announced that the Propertylink Enhanced Partnership (PEP) has entered into a contract for the sale of 80 Mount Street, North Sydney for $71 million.

The sale price represents a 29 percent premium to current book value and delivers an annualised total equity return of 58 percent while reflecting an initial yield of 4.32%..

Propertylink has a 25 percent co-investment in the PEP fund with Goldman Sachs holding the majority interest of 75 percent.

Following the sale of 80 Mount Street, the fund comprises of 8 office and industrial assets.

Completion of the sale is unconditional and is expected to occur in November.

The sale will contribute approximately $3.5 million in co-investment income to Propertylink’s distributable earnings in FY18.

80 Mount Street is a B-grade office tower comprising of 6,204 sqm of net lettable area across 14 levels.

The building was acquired by Propertylink, via the PEP fund, as part of the acquisition of the Denison Portfolio in August 2016.

Propertylink’s Chief Investment Officer, Peter McDonald said “Since the acquisition of 80 Mount Street, we have deployed a targeted capital expenditure program to refurbish and upgrade the building. Most significantly however, we have undertaken extensive leasing activity across 55 percent of the building area, driving occupancy from 75 percent to 92 percent over the last two years.”

With the approval of Goldman Sachs, Propertylink commenced a campaign to market the property for sale in July 2018.

“The sale campaign attracted unprecedented levels of interest from both local and offshore groups who were attracted to the location of the asset in the heart of North Sydney, a market with upside potential and just 6.3% vacancy,” Mr McDonald said.

The selling agents for 80 Mount Street were Knight Frank’s Tyler Talbot and Dominic Ong and CBRE’s James Parry, Kenny Duncanson and Sharon Yang.