$217m deal to sell city tower housing offices of Premier Jay Weatherill fails to go ahead

THE State Government will seek new buyers for its Victoria Square HQ — and bank a $5m deposit paid by a company that planned to buy it — after a $217 million deal collapsed yesterday.

• State Admin Centre sells for $391m to investment fund
• Development of old RAH site will take about 15 years

TREASURER Tom Koutsantonis has confirmed he will seek new buyers for the State Government’s Victoria Square headquarters and bank a $5 million deposit paid by a company which planned to buy the building after the $217 million deal collapsed yesterday.

The Advertiser today revealed Commercial and General, which is also behind plans to redevelop the old Royal Adelaide Hospital site, on Tuesday failed to meet a final deadline for coming up with the cash to close on the Victoria Square office block and a package of nearby buildings.

Under the failed deal, Commercial and General would have taken over a precinct, including the Education Department’s Flinders St base, nearby Wakefield House and Torrens Building.

Vacant buildings at 24 Flinders St and 12 Victoria Pl were also thrown into the deal, which offered the buyer a long-term lease where the Government remained a major tenant.

Industry sources warned it raised new and serious concerns about the company’s ability to finance the old RAH site overhaul, which is to feature apartments and a luxury hotel.

The Government will keep a $5 million deposit paid by Commercial and General for the office tower, but suffers a State Budget blow which will slow plans for reducing public sector debt.

Mr Koutsantonis this morning said the Government was “ready, willing and able to settle the sale of the State Administration Centre precinct and attended at the Lands Titles Office”.

He said Commercial and General’s lawyers met Government officials at the agreed time of 11.30am Tuesday, but “confirmed that the company was unable to settle the sale”.

Mr Koutsantonis said this was “in default of its contractual obligations”.

“The Government has now exercised its rights under the contract and terminated the sale, including to retain the $5 million deposit,” Mr Koutsantonis said.

“The State is extremely disappointed in Commercial and General’s failure to complete the sale.

“It remains our intention to sell the State Administration Centre Precinct and we are aware there is significant market interest from parties willing to consider purchasing the buildings.”

Worrying: Premier Jay Weatherill and Treasurer Tom Koutsantonis ... the collapse will slow the Government’s plans for reducing public sector debt.

It is understood the Government will now go back to the open market in a fresh bid to sell the building, which was first put on the auction block by former treasurer Kevin Foley in 2008.

Mr Koutsantonis last month told Parliament that Commercial and General had missed deadlines that included one in November where Government staff were stood up at the Lands Titles Office.

Commercial and General did not respond to a request for comment, but is believed to have been seeking finance for the State Administration Centre precinct sale from the UK.

It is understood the Government has received reassurances about the future of the old RAH development, where Commercial and General is partnering in a with consortium John Holland.

John Holland is said to be delivering the bulk of about $1 billion in old RAH project finance.

Last year, three bids were received to buy the SAC precinct.

They included a plan to sell the package to Adelaide businessman Jason Di Iulio, which also mysteriously broke down.

Mr Di Iulio’s offer was understood at the time to be worth $217 million and ‘cash unconditional’, meaning the Government did not need him to secure investors before accepting.

Last month, Mr Koutsantonis told Parliament he “understands that the purchaser (Commercial and General) has several outstanding issues” and the state was “considering its position”.

He said he could not elaborate at the time for commercial in confidence reasons.

Opposition Leader Steven Marshall yesterday said the Government was “incapable of securing a good deal for South Australians”. “They have been trying to sell these buildings for years and wasted a huge amount of taxpayer resources along the way,” Mr Marshall said.

“Labor can’t be trusted to deliver critical major projects like the (old) RAH redevelopment.”