Singapore’s Keppel Capital has emerged as the latest suitor to target a stake in the $500 million-plus office tower at Circular Quay that Chinese group Poly Global has kicked off, ahead of locking in a tenant.
The play by the heavyweight Singaporean group comes in the wake of the GPT Group and its wholesale office fund pulling back from a transaction that would have seen them take a half stake for $260 million-$270 million.
The Australian group showed strong interest in the building but its investment committees rejected the deal.
But this has opened the way for rival groups, including Keppel Capital, to chase an interest in the tower at a time when office vacancy is low and the value of skyscrapers is rising.
Keppel Capital, via its listed Keppel REIT and funds managed by Alpha Investment Partners, are among the top investors in the Australian real estate sector.
The Singapore-based company looked at the property last year and is back again as it looks to lift its funds under management. It already invests across real estate, infrastructure and data centre assets.
The listed Keppel REIT has a $S7.9 billion portfolio in Singapore, Australia and South Korea. It has a record of taking on stakes in development projects when they are in their early stages and then retaining them when they are complete.
The trust is already a substantial investor and has half stakes in buildings including 8 Chifley Square in Sydney, the David Malcolm Justice Centre in Perth, the 275 George Street in Brisbane and 8 Exhibition Street in Melbourne.
In one of the trust’s largest deals, Keppel REIT in 2017 struck a $347.8 million deal with Australia Post that saw it take a half stake in the Melbourne skyscraper that will house the Victoria Police headquarters.
The Australian revealed last October that Poly had snared strong interest in the $500 million tower it is building at Sydney’s Circular Quay, with GPT then heading the field, as it also looked at occupying the building.
Poly flagged plans to develop and partially own both the Sydney tower and another it is developing in Melbourne. It pitched bringing in partners as part of a strategic play to expand its global asset management business, which has a focus on value-add opportunities and developments.
Knight Frank is handling the property transaction.
The Sydney tower is advancing, with construction group Watpac undertaking early contracting works. The 17,000sqm office project at 210-220 George Street is billed as Poly’s first local office site. In Melbourne, the Chinese-backed developer has begun early works on the 24-storey tower at 1000 La Trobe Street, Docklands, which will span about 31,500sqm.
This article originally appeared on www.theaustralian.com.au/property.
