Central Square Investment Committee Memo

Project Overview

This project was an investment committee memo for Central Square, a B-grade office asset at 323 Castlereagh Street, directly opposite Central Station in Sydney. The recommendation was to acquire the asset at A$320M–A$335M, with a hard ceiling of A$340M. The base case delivered an 18.1% levered IRR and 2.1x equity multiple over a 4-year hold. The core thesis was not passive office exposure, but a time-sensitive brown-to-green repositioning strategy: acquire under-rented income, execute a A$20M NABERS 5-star upgrade, retain Legal Aid on a 10-year anchor lease, re-let vacant and vacating space into the Tech Central demand corridor, and exit into a recovering ESG-compliant Sydney CBD office market.

Investment Snapshot

Strategic Framing

What I Did

• Structured the investment thesis around a brown-to-green repositioning rather than a passive office acquisition.
• Analysed tenancy structure, lease expiry risk, vacancy, rent reversion, and the strategic importance of retaining Legal Aid as an anchor tenant.
• Built the asset mispricing argument around below-market rents, Central Station adjacency, Tech Central demand spillover, and the lack of current NABERS rating.
• Designed a 4-phase business plan covering acquisition, transition, lease-up, and exit, with clear NOI milestones and risk triggers.
• Developed the value creation bridge linking entry value, NABERS capex, Legal Aid renewal, Industry lease-up, vacancy absorption, NOI growth, and exit value.
• Prepared the capital structure and financing logic, recommending 55% LTV to protect ICR covenant compliance during the 2027 income trough.
• Built IRR sensitivity logic across purchase price and exit cap rates to define the recommended bid range and hard ceiling.
• Framed the final investment committee recommendation around downside protection, ESG upgrade necessity, leasing execution, and risk-adjusted returns.

Business Plan

Reflection

This project strengthened my understanding of how real estate private equity decisions are built around timing, downside protection, and executable value creation rather than headline returns alone. The most important learning was that a compelling acquisition thesis needs a clear catalyst. In this case, the catalyst was the combination of under-rented government-backed income, a looming lease event, and a mandatory ESG upgrade. Without the NABERS repositioning, the asset carried tenant retention risk; with it, the asset became a stabilised, transit-led, ESG-compliant office product positioned for institutional exit. Another key takeaway was the importance of underwriting the trough, not just the upside. The 2027 period created a planned income dip due to Industry vacancy and NABERS capex. The financing structure therefore had to be conservative enough to maintain covenant headroom while still delivering the target return. This made the capital stack and ICR analysis as important as the value creation story. The project also showed me how investment memos need to translate complexity into committee-ready conviction: what to buy, why now, at what price, what can go wrong, and how the sponsor controls the outcome.