Merricks Capital Partners with Milligan Group in Acquisition of Prime Sydney Development Site
15th March 2023Commercial Real Estate Media Release
One of Sydney’s last remaining major CBD sites is on track for development after Merricks Capital today announced it would finance the acquisition by the Milligan Group of a strategic site located on the corner of Pitt and Hunter Streets in central Sydney.
The acquisition is the culmination of five years’ planning and involves the complex aggregation of four buildings and 71 individual titles.
The Milligan Group plans to construct a 55-storey mixed use commercial tower at the site which, at 220 metres tall, will be the world’s tallest hybrid timber tower. Development of the site is expected to integrate with the planned Hunter Street metro station, anticipated to be completed by 2030 and forecast to be one of the busiest train stations in the Southern Hemisphere.
Dan O’Donoghue, Head of Private Credit at Merricks Capital, said Merricks Capital’s close working relationship with the Milligan Group and strong investor relationships had been critical in facilitating the $465 million funding agreement.
“The Milligan Group is to be commended for their tireless efforts putting the site together and we look forward to working closely with James Milligan and his team to deliver the project.
“This is another step in the transformation of the City of Sydney, and the development, valued at approximately $2 billion once complete, will have strong cultural and economic benefits.”
Mr O’Donoghue said the complex agreement required close co-operation with local and international investment partners and reflected Merricks Capital’s expertise in both the private credit market and the commercial real estate sector.
“The acquisition shows that there is a strong market outside of the major banks to fund high quality assets at sensible valuations,” he said.
Milligan Group founder James Milligan said, “We are delighted to have secured this funding.
“Full credit is due to Merricks Capital and our legal teams, whose support and expertise have been invaluable during the complex process of bringing this site together, and I thank them for their contribution.”
The proposed development of a world class, mixed-use office building will fit with Sydney City’s plan to become a world leader in urban design and the creation of lifestyle precincts.
“This is a new generation, sustainable office building. As employers encourage staff back to the office post covid, feedback from employees has been around shortening the commute and working in high quality, sustainable spaces designed for collaboration and lifestyle,” Mr Milligan said.
Merricks Capital Executive Chairman and Chief Investment Officer Adrian Redlich said there had been significant interest in the project from local and international investors.
“The key to providing our investors and partners with a strong risk-adjusted return in the commercial office sector is financing A-Grade products which meet the market demand in this post-covid world.
“We have worked closely with the Milligan Group and other stakeholders to reduce the risk of the project through positive planning outcomes, a clear pathway to repayment of our facility and the construction of a world class office building.
“We enable our investors to invest in private credit that has historically only been accessed through large multi-national institutions.”
The transaction comes after three years of strong growth for Merricks Capital, having deployed $4.5 billion across its private credit strategy in that time.