ARA closes in on $600m Southbank purchase
Singapore-listed ARA Asset Management is seeking more major assets in Australia as it also gets deeper into due diligence on Dexus Property Group’s landmark Southgate complex in Melbourne in a deal worth close to $600 million.
The group, which is working with the backing of a major Asian wealth fund on the Melbourne deal, is also targeting further office assets after a spree that has seen it buy in Brisbane and Perth.
ARA has close ties with the South Korean funds that have rapidly emerged as global property investors and the Korean Investment Corporation, which has been identified as a likely backer of the Melbourne transaction.
A-grade tower: Dexus offers $150m ANZ Centre
In 2012, the fund emerged as one of the new investors in QIC’s wholesale property fund, committing more than $200 million to what was its first Australian property investment.
Three years earlier KIC had signed a memorandum of understanding with the Queensland Government-owned fund manager, appointing it one of KIC’s institutional investment managers.
Now KIC could help ARA increase the pace of the Singaporeans’ Australian expansion.
The listed group beat a deep field of local and international investors with a direct approach for the asset, which sits on a key 2.1ha parcel on the Yarra River.
While the parties are not commenting, the deal would be the largest single direct property deal this year, trumping even a series of Sydney office sales.
The complex, opposite Flinders St Station at the gateway to Melbourne’s arts precinct in the heart of Southbank, includes the HWT Centre and IBM Tower.
Dexus is selling the HWT and IBM towers in Southgate.
It came into the Dexus portfolio in 2000 and was held at a value of $482.2 million, reflecting a market capitalisation rate of 6.41%, though the deal is sharper.
Bids for the centre were in the $570-$600 million range, and came from a range of international and local investors keen to tap into Australian office property at a time when Dexus has adopted a cautious stance that has led it to seek to trim back its gearing.
ARA, led by veteran executive David Blight locally, has a strong desire to build a platform.
The group this year has added two substantial assets to its local portfolio, including tycoon Kevin Seymour’s HSBC Tower in a $188 million deal brokered by JLL and Knight Frank. It also paid $84 million for a Perth tower at 81 St Georges Terrace, sold by businessman Nick Tana via JLL.
The deal would be the largest single direct property deal this year, trumping even a series of Sydney office sales
They were slotted into the Peninsula Investment Partners vehicle.
The Southgate complex carried a weighted lease term by income of 4.3 years and Dexus has added value through intensive leasing.
It is anchored by two A-grade buildings covering about 66,455sqm. The overall complex, including retail, spans about 76,600sqm.
South Korean investors are a growing force locally. A group advised by Inmark Asset Management this year swooped on the Woolworths headquarters in Sydney for $336.45 million.
Inmark also advised South Korea’s Mirae Asset Global Investments on buying the Four Seasons Hotel Sydney for $340 million in 2013.
This article originally appeared on www.theaustralian.com.au/property.
