Project Overview
Client
Institutional Investor
Property Type
Commercial office and retail
Reason for Service
Compulsory acquisition advisory and valuation
Preston Rowe Paterson was instructed by Dexus Funds Management Limited, via King and Wood Mallesons, to provide comprehensive valuation and strategic advisory services in relation to a significant Sydney CBD asset portfolio comprising 39 Martin Place, the Martin Place Retail Circle and 60 Castlereagh Street.
The instruction arose in the context of the proposed acquisition of the properties by Transport for NSW as part of the Sydney Metro City project, one of the largest infrastructure developments undertaken in New South Wales.
The engagement required a detailed assessment of market value, alongside a rigorous analysis of statutory compensation in accordance with the Lands Acquisition Just Terms Compensation Act 1991.
In addition, Preston Rowe Paterson was engaged to provide strategic advice regarding redevelopment potential, ownership synergies and the implications of any acquisition offer, supporting the client in navigating a complex negotiation environment involving multiple assets, interests and valuation considerations.
Summary of Scope of Services
Our engagement involved:
- Investment valuation of the freehold and leasehold interests
- Assessment of compensation in accordance with the Lands Acquisition Just Terms Compensation Act 1991
- Analysis of disturbance, severance and special value considerations
- Evaluation of redevelopment potential including site amalgamation benefits
- Strategic advice in relation to Transport for NSW acquisition proposals
Asset Overview:
The assignment comprised a strategically significant CBD holding centred on Martin Place.
39 Martin Place is a 24 level commercial office tower with ground and upper ground retail, providing approximately 16,258 square metres of net lettable area and 67 basement car spaces.
Martin Place Retail Circle is an underground retail arcade forming part of the Martin Place station precinct, held under a long term leasehold interest expiring in 2041, with approximately 805 square metres of gross lettable area across multiple retail tenancies.
60 Castlereagh Street is a 20 level commercial office building with retail accommodation, providing approximately 27,013 square metres of net lettable area.
Collectively, the assets formed a highly strategic landholding with direct integration into a major transport interchange and material redevelopment potential.
Valuation Methodology
Preston Rowe Paterson adopted a multi layered valuation approach incorporating investment, statutory and development analysis.
The core valuation was undertaken using capitalisation and discounted cash flow methodologies, supported by detailed benchmarking against Sydney CBD market evidence. This was complemented by a statutory compensation assessment in accordance with Section 55 of the Act, including consideration of market value, disturbance and special value.
A detailed redevelopment feasibility analysis was also undertaken, incorporating planning controls, approval scenarios and integrated site redevelopment modelling across the combined landholding.
This engagement demonstrates Preston Rowe Paterson’s expertise in:
- Complex CBD investment valuation across multi asset portfolios;
- Statutory compensation assessment under the Lands Acquisition Just Terms Compensation Act 1991;
- Analysis of special value, disturbance and ownership synergies;
- Strategic advisory in relation to government acquisitions and infrastructure projects;
- Redevelopment feasibility modelling including integrated site amalgamation;
- Negotiation support through detailed analysis of acquisition offers and valuation metrics;
- Application of discounted cash flow and capitalisation methodologies in institutional grade assets; and
- Advising institutional clients on high value, high profile acquisition matters.
Outcome
Preston Rowe Paterson provided expert valuation and negotiation advice to support Dexus in its engagement with Transport for NSW.
The analysis confirmed that the State’s acquisition positioning reflected strong market conditions and yield compression at the time. The offer, when assessed against underlying investment metrics and statutory considerations, was considered commercially attractive on an as is basis and difficult not to recommend acceptance if formalised
Approximately
16,258m²
Net lettable area
A total of
67
basement car spaces
Approximately
805m²
Gross lettable area
We Deal with the Mainstream & Specialise in the Complex for all asset classes
