Aware Super circles stake in $1.2bn tower as Lendlease rides metro wave
The Lendlease Victoria Cross development in North Sydney has won new suitor in Aware Super.
Property developer Lendlease is in talks to strike a deal with heavyweight superannuation fund Aware Super that would see it snap up a 75 per cent interest in the under-construction Victoria Cross Tower in North Sydney.
The deal is expected to be a benchmark sale for this part of the cycle as superannuation funds have become more active and confidence in offices grows.
Just weeks ago, CSC doubled its ownership of Sydney’s Grosvenor Place, moving from 25 per cent to 50 per cent and bringing in the GPT Group as its partner.
Aware Super has now emerged as a suitor on the 75 per cent interest in Victoria Cross, at a time when trading of other office buildings is also picking up in North Sydney. The market is recovering from high vacancy levels. Fears of an oversupply of office space in the area are falling as some projects have been abandoned and other buildings are being lined up for residential conversions.
Selling the stake in $1.2bn Victoria Cross will be a coup for the listed developer, which had been about to go to market again to seek a buyer. Lendlease had long sought an external partner on the project and held talks with Japan’s Mitsubishi Estates Asia in 2023. It also sold a 25 per cent portion of the project to its own unlisted APPF Commercial fund in 2019. The latest move comes against a backdrop of Lendlease selling off billions in assets across the portfolios it manages, including sales in Singapore and in retail property, where Erina Fair on the NSW central coast is selling for about $900m.
The deal-making also signals Lendlease’s determination to keep on undertaking large-scale projects with the backing of major pension funds and international investors, after the bruising fight over the future of its local property funds empire. The company saw off a challenge led by another superannuation fund, Hostplus, which had sought to install Mirvac as manager of the $10bn Australian Prime Property Funds empire. Attempts to change the manager of the $2bn industrial fund and the $2.8bn retail fund were thwarted as not enough other investors got behind a switch.
Aware Super is believed to have played a key behind-the-scenes role although it has not spoken publicly about the battle and the fund and developer declined to comment on the North Sydney move. Aware Super is also separately a 6.6 per cent shareholder in Lendlease and is backing projects around the world the developer is undertaking. In 2022, Lendlease and Aware Super struck a deal that took Aware to a 49.9 per cent stake in the Keyton retirement business. Aware Super also backs the Lendlease Americas Residential Partnership which invests in projects in Chicago, Boston, New York and Los Angeles.
Winning the contract to deliver a new metro railway station in North Sydney and the office building above it was a coup for Lendlease when it picked up the job in 2018. However, the market turned against both large office projects and the area, and winning tenants proved to be tough initially. Market experts said sentiment had now shifted and pointed to tenant wins including the NBN planning to shift into the building.
The tower is now more than 30 per cent leased, with a total of about 70 per cent leased or in active negotiations. Novartis is shifting to the tower and it will join other businesses in the building, including Ventia and 24/7 gym and wellness facility One Playground.
