ISPT snares interest in $220m tower as Forza Capital circles

The super fund-backed manager has won strong interest in a North Sydney office building it is looking to offload.

ISPT is selling 100 Pacific Highway, North Sydney.

Superannuation fund-backed manager ISPT has hooked a buyer for a North Sydney office building that it is looking to offload at around the $230m mark, with the private Forza Capital circling.

The move comes as syndicators and fund managers are starting to make the running in the office market in the same way they did in shopping centres ahead of the upswing in that sector.

The block at 100 Pacific Highway was hotly pursued by the funds groups that are becoming more aggressive in the office market ahead of a full recovery. They must move fast as some large landlords, including Charter Hall and Dexus, have signalled that they are now more reluctant to part with Sydney assets.

The North Sydney move would fit with Forza Capital’s model of buying offices whereby it can apply its value-add and repositioning approach as North Sydney comes out of a trough in its leasing market.

Forza Capital last year bought an A-grade block in the Sydney CBD from a fund run by Investa for about $130m, showing a yield of about 8.4 per cent. The Melbourne-based property fund manager also bought what was its second Sydney office asset, buying 223 Liverpool Street in Darlinghurst from ST Real Estate for $64.5m last year.

It cited the counter-cyclical buying conditions in the office market, and the purchase price there translated to a fully leased yield of 8.2 per cent.

Forza Capital will likely cite similar conditions as it looks to undertake a capital raising from its wealthy clients.

Both of the fund managers declined to comment, as did sales agents CBRE and Cushman & Wakefield.

ISPT put 100 Pacific Highway up for sale in May for the first time since it was built in 2006. The move was part of a broader selldown in Sydney by the manager. It is also selling a $90m tower in Smith Street, Parramatta, as investors seek out buildings that will deliver after the big reset in suburban office markets. Few assets have traded, but buyers are warming towards these markets as some buildings are converting to residential holdings. North Sydney has also been relatively quiet, with the market expecting larger assets to hit the market later this year.

The North Sydney block is high quality and will benefit from both the withdrawal of office stock from the market and the lack of new office buildings once Lendlease’s Victoria Cross project is completed. The area is also benefiting from the flight-to-quality theme of suburban tenants that are relocating into the North ­Sydney CBD.

Designed by Peddle Thorp Walker architects and developed by ISPT in a joint venture with Leighton, the asset has 21,879sq m of A-grade office space on a large 2680sq m site, with views over Sydney Harbour.

Originally published as ISPT snares interest in $220m tower as Forza Capital circles