Mirvac offloads Sydney towers 60 Margaret St and the MetCentre

A Japanese investor has stepped in to back the largest office sale in the Sydney CBD since the Covid-19 pandemic eased.

Mirvac and Blackstone have sold the 60 Margaret St complex.

Funds house Ashe Morgan has tapped into a unit of Japan’s famed trading house, Mitsubishi, to tie up the largest office skyscraper deal of the year as it picked up 60 Margaret St and the MetCentre in Sydney for just over $777m.

The combined office tower and retail centre was sold off by property group Mirvac and US private equity giant Blackstone after months of behind-the-scenes negotiations. The deal went ahead despite multiple interest rate increases.

Mirvac and Blackstone exchanged contracts for the sale of the complex, which the listed group said it sold to Ashe Morgan and MEC Global Partners Asia – a funds business that is part of the Mitsubishi Estate Group – for $388.6m. That price was on a 50 per cent basis and was in line with the June 2023 book value.

The office sector has been wracked by concerns of deeper valuation falls but the sale shows that top grade assets have come off, but not by as much as older buildings facing more vacancy.

“The sale of 60 Margaret St and MetCentre forms part of our strategic asset sales program, helping to further strengthen our balance sheet and improve cashflow resilience of our investment portfolio in a challenging operating environment,” Mirvac chief executive Campbell Hanan said.

He said the move gave the group balance sheet flexibility and would ensure “we are well positioned to take advantage of future opportunities when they arise”.

“The sale is in line with our strategy to focus our exposure in the office sector to premium assets and grow our exposure to the living sectors and industrial over time,” he said.

The complex’s 39-level A-grade office tower has more than 40,000 sqm of net lettable area and the MetCentre comprises over 6,400 sqm of retail space, with shop frontages to George St. The MetCentre, connects the office tower to Wynyard train station.

The deal was first flagged by The Australian last December when real estate house Ashe Morgan and a Japanese partner were identified as the parties chasing the Margaret St skyscraper in a deal then worth about $830m.

The sale was handled by Cushman & Wakefield’s Josh Cullen, Mark Hansen and Bridhe Woods, and JLL’s Luke Billiau, Simon Storry, James Barber and Sam Hatcher.

In Melbourne, Mirvac has exchanged contracts with a purchaser for the sale of 367 Collins St, with the contract conditional on capital. The contract, reported to be with Melbourne-based developer Goldfields, is still to be sealed and the company said it continued to work with the purchaser as it focuses on raising capital.

Another Japanese trading house has shown interest in backing the Melbourne deal, in keeping with strong interest in the city from Asian investors.