Built commences construction on new Reddam House Campus in North Sydney
We are proud to have commenced construction on the adaptive reuse development of the Harry Seidler-designed heritage office building into a new Reddam House campus in North Sydney.
The start of construction marks a significant milestone in the development deal that has secured a long-term lease to Inspired Education and a forward purchase agreement with Singaporean asset manager Keppel Corporation (“Keppel”).
Inspired Education, who manage a portfolio of schools globally and operate the Reddam House brand in Australia, will take a 20-year lease over the 9,150sqm of floor space with an option for an additional 20 years.
Keppel – who acquired the property at an initial yield of 4.25% in a put and call arrangement for its $3 billion education themed Keppel Education Asset Fund (KEAF) – will take ownership of the asset following the change of use approval and refurbishment works.
The ~$120 million sale price has yielded a substantial upside on the end-of-life commercial asset that will see Inspired Education self-fund its adaptive re-use fitout with Built originally acquiring the 41 McLaren St, North Sydney property for $80 million in late 2021.
Built Development Director Jono Cottee said the transaction was a strong result due to Built’s ability as builder and developer to deliver a bespoke asset with a long-term globally backed tenant for offshore institution capital.
“Through our unique ability to deliver a turnkey facility for Inspired Education that also matched the requirement of the KEAF for a long-term stable income in the education sector, we achieved one of the strongest results of 2023 against the backdrop of a market challenged by increasing interest rates and yields,” he said.
Leveraging their position as both developer and builder has allowed Built to solve the planning and construction risk in the project and create an attractive solution for tenants and investors alike while delivering a strong return on investment based on initial purchase price.
“By navigating the complex planning, heritage, and construction requirements, we can provide Inspired Education with the certainty of delivery for a new facility that meets their ongoing growth and expansion. Keppel are then provided with security of income for their investors in a fully refurbished building that comes with a long-term lease with CPI backed increases with a leading global operator of premium schools,” he added.
Under the arrangement with both Inspired Education and Keppel, Built is responsible for managing the upgrade and transformation into a 1,560 student K-12 campus that will open for the 2025 school year.
The upgrade will add an additional 1,650sqm of education space to the existing building and transform the carpark into a school drop off and auditorium. The new campus will provide state-of-the-art facilities such as a performance space, theatre, sports hall, as well as modern classrooms, including high-tech science and design tech labs, music rooms, drama and dance studios, and a library.