Project Overview
Client
Local Government and International Superannuation Fund
Property Type
CBD Heritage Retail Shopping Centre
Reason for Service
Leasehold Interest Valuation / Lease Restructuring Advisory
Preston Rowe Paterson was instructed by the City of Sydney Council to undertake a comprehensive valuation of the Queen Victoria Building, including:
-
The hypothetical unencumbered freehold;
-
The Lessor’s (City of Sydney’s) interest;
-
The Lessee’s (Ipoh’s) interest; and
-
The marriage value arising on potential merger of interests.
In addition to determining market value, the engagement required a detailed review of the 99 year head lease, including its complex tiered cash flow appropriation provisions, to inform discussions around possible lease restructuring without prejudicing either party’s financial position.
Summary of Scope of Services
- Valuation of the hypothetical unencumbered freehold interest in the Queen Victoria Building;
- Valuation of the Lessor’s and Lessee’s respective interests under the long‑dated head lease;
- Detailed analysis of head lease cash flow mechanics and tiered appropriation structures;
- Quantification of marriage value arising from the potential merger of interests; and
- Advisory input on the valuation and financial implications of potential lease restructuring.
Asset Overview:
A landmark heritage retail shopping centre occupying a full city block in the Sydney CBD, comprising basement, ground and upper retail levels with approximately 13,982 square metres of gross lettable area, extensive specialty retail, an integrated car park and direct connections to Town Hall Station, held under a long‑dated head lease.
Valuation Methodology
A multi‑method valuation framework was adopted to reflect the complexity of the asset and its lease structure, including:
- Term and reversion capitalisation of retail income on a tenant‑by‑tenant basis
- Discounted cash flow modelling of unencumbered and leasehold interests
- Detailed modelling of head lease cash flow waterfalls and deferred reversions
- Separate analysis of the Lessor’s interest, Lessee’s interest and marriage value
- Cross‑checking of outcomes to ensure market consistency and internal reconciliation
This engagement demonstrates Preston Rowe Paterson’s expertise in:
- Complex heritage CBD retail assets
- Long‑dated leasehold and head lease valuation structures
- Valuation of partial interests and marriage value
- Valuation‑led advisory supporting public sector negotiations
99
year head lease commencing in 1984 and expiring in 2083
Approximately
13,982m²
of gross lettable retail area, measured across multiple trading levels
Amalgamation and subdivision into
167
specialty retail shops (255 tenancies including ancillary uses)
We Deal with the Mainstream & Specialise in the Complex for all asset classes
