SBM is pleased to confirm the successful sublease of 10 Buda Way, Kemps Creek, a 30,581 sqm, including 30,000 sqm of climate-controlled warehouse and 581 sqm of office space in Western Sydney, leased within 10 weeks of being appointed
The project
SBM coordinated the leasehold disposal of 10 Buda Way, Kemps Creek, appointing CBRE as our partner in Sydney.
The campaign generated strong levels of occupier interest, with 16 inspections completed. Demand was driven by the facility’s super-prime specification and immediate availability.
As a result of the successful marketing and leasing strategy, the transaction achieved a record rental rate and incentive package for buildings exceeding 30,000 square metres in the Kemps Creek area.
The outcome
The transaction delivered a significantly above-market outcome, generating an estimated $23 million in value compared with the likely alternative scenario.
Key value drivers included:
Above-market rental rate: The agreed rent was $10 per sqm above prevailing market levels, eliminating a rental gap and generating approximately $1 million in additional value over the remaining lease term.
Reduced incentive: A 2% incentive was negotiated, compared with a market standard of 25-30%, resulting in an estimated $7 million saving.
Make-good liability transfer: Estimated $5 million saving.
Collectively, these outcomes delivered approximately $13 million of value above market benchmarks.
In addition, the transaction avoided the risk of a deteriorating lease position. Without securing this deal, the remaining lease term would likely have shortened, reducing marketability and potentially forcing a discounted “fire-sale” transaction. Conservatively, this scenario could have resulted in the loss of approximately 1.5 years of rent, equating to an estimated $10 million in foregone value.
| Value Driver | Estimated Benefit |
|---|---|
| Above-market rental rate | $1m |
| Reduced incentive | $7m |
| Make-good liability transfer | $5m |
| Avoided fire-sale discount | $10m |
| Total Value Created | $23m |
Note these estimates exclude additional savings associated with property taxes, holding costs and utilities.
It is an extraordinary accomplishment on the part of all of us – CTDI, SBM and CBRE – in that just 10 weeks later we completed a deal on record terms. A big thanks to all involved!
If you have a property disposal that presents unusual challenges, we would be delighted to discuss how we can help. Get in touch with our team.
