A joint venture between Metrics Credit Partners and developer Billbergia Group has secured a 6,000-square metre site in Sydney’s central business district (CBD) from offshore developer Han’s Holdings Group.
Spanning eight individual sites consolidated between 2015 and 2019, the acquisition comprises 245–247 and 249–253 Castlereagh Street, 324–330, 332–336 and 338–348 Pitt Street, and 126 Liverpool Street.
Plans for the location include the development of two 80-storey towers, delivering a combined total of around 600 luxury residences and premium hotel accommodation, complete with a ground floor civic plaza and new retail space.
The site, one of the largest in the CBD, will be a part of a scheme to reshape “midtown into a world-class city precinct”, according to Metrics, and is poised to stand among the tallest in the Sydney skyline at completion.
In conversation with InvestorDaily, Metrics managing partner Andrew Lockhart explained that the alternative asset manager’s role within the deal is primarily to “support our clients”.
“We have a long-standing relationship with the client, Billbergia Group, on that side. We’ve completed a number of projects for them as a lender. We’re also involved in a number of joint ventures with them where we are an equity participant,” Lockhart said.
In fact, the latest acquisition represents Billbergia’s first foray in the Sydney CBD and comes on the back of 88 Walker, a mixed-use project in North Sydney, also delivered in partnership with Metrics.
“So for us, what we’re looking to do is to use our relationships, our networks and our origination capability across the market, and use those relationships together with the information we have about market demand, the feasibility, the viability of different projects, to identify good investment opportunities for our investor clients,” Lockhart said.
“That’s really what drives us.”
Expounding on this, the managing partner detailed that Metrics has fund mandates that allow it to invest from senior debt, all the way through to equity, in the capital structure.
In the case of its latest midtown site acquisition, the project is compelling from an equity perspective.
“[Billbergia are] a very good client that we believe can deliver the project well. The site benefits from a lower degree of risk because the planning outcome is already there. We may make some amendments to the plan, but that will require council approval. But if we are successful in making those amendments to the plan, then we think we can improve the product and the project.
“When I look at our clients’ capacity to deliver and execute, there’s a very strong track record of capacity to undertake large-scale construction development projects. We obviously bring financial stability and capability to the project,” Lockhart added.
“So, when we look at it, we’re looking at it more from a financial metrics [perspective], but we’re also looking at it in the context of from a property perspective – do we believe that the market can absorb that amount of stock? Where are we in the cycle? What’s likely to impact the financial viability of that project? And that’s our role.”
Turning to the firm’s outlook for 2025, Lockhart hopes that the real estate debt sector will not encounter the same headwinds that it has in recent years.
Namely, many of the challenges that were impacting the sector as a result of COVID-19 – from construction cost increases in 2021 to long delays and supply chain issues – are beginning to dissipate.
“You’ve had an increase in demand from immigration, the movement of people as a result of expatriates coming back to the country, and also then, as the borders opened, seeing inflows from students and also from migrants coming into the country,” Lockhart said.
“So, demand for residential property has been very strong, and even though we’re seeing significant increases in interest rates, property prices have held up and increased since 2021, which has largely offset a lot of that cost inflation that flowed through.”
