Darling Square on the market as Lendlease fund and Aware Super seek an exit
Lendlease Darling Square Precinct.
Lendlease’s flagship office fund and the heavyweight Aware Super have put the Darling Square office development in Sydney housing the Commonwealth Bank on the market for more than $400m.
The pair have tapped Ben Schubert and Paul Roberts of Knight Frank and Luke Billiau and Simon Storry of JLL to sell the 12-storey campus-style facility in the Darling Harbour precinct that Lendlease developed, backed by the super fund.
The offer of the A-grade building, which spans a net lettable area of 27,750sq m over eight levels of offices and retail, will be another test for the office market after Dexus sold a half interest in 5 Martin Place and Mirvac sold a two-thirds stake in the $2bn 55 Pitt St project.
Completed in 2017, it was formerly the site of the former Sydney Entertainment Centre car park, which was demolished in 2016 as the area was revamped. The building is anchored by the Commonwealth Bank and has a long list of retail tenants.
The complex has a weighted average lease expiry of about 4.25 years and is a key node for the bank. The 99-year leasehold starting in mid-2017 is owned by Australian Prime Property Fund Commercial.
The building is more than 87 per cent-occupied and the blue-chip occupies 78 per cent of the space, with other major tenants including First Parking and Sparro Digital Marketing. It is a next generation commercial building with leading ESG certifications, including Net Zero
The Darling Square precinct.
Certification, 5.5 Star NABERS Energy and rooftop solar.
The office space features cutting-edge workspaces with high-quality fit-outs, wellness spaces, a luxury end-of-trip facility, and secure carparking. There is also an opportunity for it to be repositioned in future to accommodate an education tenancy given its proximity to major universities.
The Australian Prime Property Fund Commercial teamed up with Aware Super to buy the underdevelopment office building for more than $300m in 2015. The two have a close relationship, with Aware Super also a major shareholder in the developer, which is undergoing a dramatic restructure aimed at bringing $4.5bn of capital back to Australia.
Aware Super’s property holdings span industrial parks, residential projects, essential worker housing, retirement living and the build-to-rent sector. The industry fund has flagged plans to boost its international holdings and make counter-cyclical plays.
It has trimmed its traditional property holdings and has pivoted into the logistics and living sectors.
The Lendlease fund has been under pressure. S&P Global Ratings in April downgraded APPF Commercial to BBB+, from A-, and lowered the long-term issue rating on the fund’s guaranteed senior unsecured medium-term notes to BBB+, from A-. It said debt funding of past acquisitions, sizeable capital expenditure, and high interest costs would weaken its key credit metrics over the next 12-18 months.
The parties and agents declined to comment.
