Hong Kong group seals $653m deal for Sydney office building
Hong Kong-based Link REIT has made one of the biggest direct property plays of the year, snapping up an office building beside Westfield Sydney for about $683 million.
The move caps an extraordinary year of office plays in Sydney’s central business district in which Charter Hall took control of Chifley Tower and Dexus and its funds took full ownership of the MLC Centre.
The latest play has been made by Asia’s largest real estate investment trust, Link REIT, which was keen to expand beyond its home market and mainland China.
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The purchase was flagged by The Australian and will deliver US private equity company Blackstone a rapid profit.
It has flipped the building, that houses the corporate regulator, after buying it as part of a package of three towers from local Westfield owner Scentre in a June deal with an overall value of $1.52 billion.
Hong Kong money is flowing into Sydney and other groups have picked up assets.
HKMA bought a slice of the Barangaroo South precinct as well as an interest in Brookfield’s $2bn Wynyard Place development in Sydney.
Races for towers are still in train as the year closes with Dexus, Charter Hall, Lendlease and Investa among the runners chasing a planned $1bn tower being developed by Macquarie Group in Martin Place that is yet to win a tenant.
Property developers Mirvac and John Holland also won the rights to their first major over-station development and will construct five buildings in Sydney’s inner suburb of Waterloo worth about $800 million.
The redeveloped A-rade complex at 100 Market St that Link REIT has bought also has the Australian Taxation Office and Scentre as tenants.
The building changed hands at a crisp yield of close to 4 per cent, sparking a rerating of the sector. JLL and Cushman & Wakefield handled the deal.
The move is a departure for Link REIT as it mainly owns shopping centres and has been scouting the region for major property purchases. It had already flagged a desire to buy more commercial properties in China’s top cities.
Link chief executive George Hongchoy said the property was a quality asset. “The acquisition will drive growth in sustainable income and capital value, with limited downside risk,” he says.
“A more diversified portfolio with overseas properties providing new sources of income will help ease our reliance on Hong Kong properties to generate income progression, and contribute to a healthier growth trajectory.”
The 28,385sqm building has 10 storeys and was redeveloped in 2010/11 as part of the Westfield Sydney redevelopment.
This article originally appeared on www.theaustralian.com.au/property.
