Hong Kong’s Arch Capital, and a new entrant to Sydney’s commercial property market, is in exclusive due diligence to buy 95 per cent of the strata office block at 68 Alfred Street in North Sydney for about $45 million.

The complex deal was initially struck with owners holding 75 per cent of unit entitlements in the block – one of the last freehold blocks on the street alongside its neighbour, Kimberly Clark House – but a further negotiation brought the deal up to 95 per cent of the block being sold in one-line.

The property at 68 Alfred Street returns a net annual rent income of more than $2 million. Supplied

Most of the sale agreements were undertaken with leasebacks to the predominantly owner-occupier vendors.

Arch Capital was represented by the former chief executive of Mulpha in Australia, Winson Chow.

The B-grade 4402 square metre building at 68 Alfred Street was strata-titled in 1997. It has 11 levels of offices, retail space on the ground floor and 28 basement car parks. It is returning a net annual rent income of more than $2 million.

Arch Capital is understood to be planning a substantial upgrade of the building.

Colliers International’s Jon Chomley and Tom Appleby closed the sale which started with an expressions of interest campaign late last year.

“Securing the amalgamation was challenging however the revised strata laws now make it possible for a developer to acquire the entire building for refurbishment or redevelopment. With many of the strata buildings requiring major capex this type of collective sale enables the strata owners to achieve a higher sales value than selling their units individually,” Mr Chomley said.

“The recent reform to NSW strata laws, in particular the introduction of the 75 per cent rule has seen collective sales of commercial strata buildings on Sydney’s North Shore become increasingly prevalent,” Mr Appleby said.