Dentons and Colliers International have successfully advised the Owners Corporation of 252 Sussex Street Sydney to receive a landmark court judgment for a Strata Collective Sale in New South Wales.

The decision is the first-ever court-ordered collective sale following changes in November 2016 to the Strata Schemes Development Act, which allowed for the sale or redevelopment of strata properties on a threshold level of support of 75% of owners, subject to Land and Environment Court Approval.

Under the Act, if an Owners Corporation has at least 75% of lot owners in strata scheme approve the sale of the building, it can apply to the Court for an order approving and requiring the sale of all lots.

The Court is required to approve the sale if it is satisfied on a number of criteria, including the compensation payable to each owner and that the sale is just and equitable in all the circumstances.

Dentons and Colliers worked together on behalf of the Owners Corporation of 252 Sussex Street - a 159 lot strata scheme currently operating as a 119-key serviced apartment over 19 floors.

Dentons advised on all aspects of the collective sales process and handled the Land and Environment Court proceedings, while Colliers International agents Gus Moors and Karen Wales marketed the property through an International Expressions of Interest campaign.

Head of Hotels Gus Moors and Director Transaction Services Karen Wales from Colliers International took the property to market in the latter part of 2017.

There was extremely strong bidding over multiple rounds, highlighting the strong investor appetite for well-located Sydney CBD hotels. Buyers were aware of the Court process that needed to occur to achieve a settlement but were prepared to wait to secure this incredible opportunity.

Mr Moors told WILLIAMS MEDIA that Yeh’s Group has been active investors in the Sydney hotel market over a number of years and were attracted by the location and the large apartment sizes. 

"They patiently worked with the Owners Corporation to meet the requirements of the new legislation and with the assistance of Dentons' solicitors, were able to achieve this new legal precedent,” he said. 

Ms Wales said, “We received strong bidding from a wide array of international and domestic groups who were clearly not dissuaded by this untested legislation. Ultimately, the Yeh’s Group successfully secured the property, adding to their growing network of Sydney hotels.”

Additionally, Ms Wales told WILLIAMS MEDIA, “Having created this precedent, other Owner’s Corporations should now feel confident to explore the potential for an en bloc sale and capitalise on the premium that this process can deliver to apartment owners.

"With a huge weight of capital seeking limited hotel stock, this test case has the potential to create further buying opportunities in the Sydney market, previously thought too difficult to unlock,” she said.

Dentons Real Estate Partner Chris Fabiansson said, “This decision is a great result for a fantastic group of owners who have worked hard over a two year period to achieve a collective sale."

"They are now part of a piece of NSW legal history in being the first group of owners to receive court approval to a collective sale.”

Dentons Planning and Environment Partner Christina Renner added, “This is a particularly significant achievement because it’s the first time the court has had to consider this legislation in detail and it is the first successful use of the legislation to enable the collective sale of a strata building.

“We are extremely proud of what we’ve been able to achieve for our client from what was new and untested legislation.

“The existence of the legislation has helped other groups reach 100% agreement without going through the whole court process, but with 159 lots that was not possible in this matter," said Ms Renner.

"With this historic judgment, we expect that market perceptions around strata collective sales will shift, and more Owners Corporations will see the opportunities that are now open to them.”

This article was originally published on The Real Estate Conversation.

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