Project Overview
Client
Major Banking and Financial Services Provider
Property Type
CBD Commercial Office Buildings
Reason for Service
First mortgage valuation for lending purposes
Preston Rowe Paterson was appointed to conduct an independent, market supportable valuation of a company title commercial office asset for first mortgage security, to be relied upon for prudent lending purposes.
The engagement required a detailed and independent assessment of a company title commercial office asset, incorporating analysis of complex ownership structures, heritage considerations and limited comparable sales evidence.
It necessitated the application of informed valuation judgement to reconcile market based evidence with income based metrics, ensuring the outcome was appropriate for first mortgage lending and aligned with current Sydney CBD owner occupier market conditions
Summary of Scope of Services
Our engagement involved:
- Provision of an independent first mortgage valuation in accordance with International Valuation Standards and API and RICS guidance
- Detailed inspection and analysis of a multi suite company title commercial office asset
- Assessment of market evidence within the Sydney CBD, including appropriate adjustments for title structure, building grade and location
- Determination of market rent and application of an income capitalisation approach as a secondary validation methodology
- Reconciliation of market and income approaches to deliver a supportable and lender ready valuation outcome
- Identification and assessment of key risks including company title ownership, heritage constraints and marketability
Asset Overview:
7 193 Macquarie Street comprises a Level 7 commercial office suite within Hengrove Hall, a circa 1930s heritage listed, D grade commercial building located on the western side of Macquarie Street in Sydney’s established legal and professional services precinct.
The asset includes five interrelated suites held under a company title structure, providing a combined net lettable area of approximately 181 square metres. The accommodation is configured to include multiple offices, reception, meeting rooms, three bathrooms and kitchenette facilities.
The property benefits from a prime CBD location in close proximity to Martin Place, the Law Courts and major transport links, supporting consistent demand from legal and professional owner occupiers.
Valuation Methodology
Preston Rowe Paterson adopted a dual methodology approach in accordance with International Valuation Standards and API and RICS professional guidance.
Market Approach (Primary)
The primary method of valuation involved detailed analysis of comparable sales within the Sydney CBD office market. Adjustments were applied to reflect:
- Location within the legal precinct
- Building quality and heritage status
- Company title ownership structure relative to strata titled assets
- Suite size, configuration and utility
- Prevailing market conditions at the valuation date
An appropriate rate per square metre was adopted following reconciliation of comparable evidence.
Income Approach (Secondary Cross Check)
As a secondary measure, an income capitalisation approach was applied to support the market based assessment. This involved:
- Assessment of market rental evidence to determine an appropriate gross market rent
- Consideration of vacancy, leasing risk and ownership profile
- Application of a market derived capitalisation rate reflective of comparable CBD office assets
Both approaches were reconciled to ensure a consistent, supportable and lender appropriate valuation outcome aligned with the characteristics of the asset and the depth of the relevant market.
This engagement demonstrates Preston Rowe Paterson’s expertise in:
- Assessing complex property interests, including company title ownership structures;
- Analysing heritage listed and secondary grade commercial assets within tightly held CBD precincts;
- Interpreting and adjusting limited market evidence to derive supportable valuation outcomes;
- Delivering balanced, risk considered advice aligned with lender requirements and market conditions;
- Understanding owner occupier driven markets within Sydney’s legal and professional services precinct; and
- Providing independent and defensible valuation advice for first mortgage lending purpose.
This engagement highlights the importance of nuanced valuation judgement when assessing legacy CBD office stock held under company title. While such assets typically trade at a discount to equivalent strata titled property, location, functionality and owner occupier demand remain key value drivers.
Through careful calibration of market evidence and conservative income assumptions, Preston Rowe Paterson delivered a robust, lender ready valuation that appropriately balanced risk, market reality and long term utility.
Approximately
181sqm
net lettable area across five interrelated office suites
A total of
6.5%
capitalisation rate applied in income assessment
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