Investa, through its unlisted wholesale fund vehicle, is considering disposing of slices of Sydney CBD office buildings, including 135 King Street, Sydney.
The powerful Investa Property Group appears set to bolster its investor base through seeking offshore capital partners with the company weighing up selling up to $900m worth of Sydney tower assets.
Billions of dollars worth of office property has hit the block as overseas investors are still chasing top-end properties which are expected to pull through even as vacancies rise and lower-grade leasing markets stumble.
Sellers are a mix of local players, including Dexus, Charter Hall, and Abacus, as well as Telstra, and offshore players like funds managers Nuveen and Inmark.
Investa, through its unlisted wholesale fund vehicle, is considering disposing of slices of Sydney CBD office buildings, including 135 King Street, 1 Market Street, and 400 George Street, although the details are yet to be determined.
The Australian understands that co-owners in the George Street building — British manager M&G and Mirvac, which manages for China Investment Corp — have been issued pre-emptive notices that Investa intends to sell. If either of these groups take up their rights to buy then the stake will trade to them.
If the pre-emptive rights are waived then the stake would come on the open market along with Market Street and King Street, likely via Simon Rooney and Flint Davidson of CBRE and Josh Cullen and Mark Hansen of Cushman & Wakefield, although the agents declined to comment.
If the move proceeds, Investa’s aim is to find a partner to invest alongside the Investa Commercial Property Fund and provide further capacity to expand through its development pipeline. The initiative follows the group raising $800m in fresh equity this year.
The fund’s development pipeline includes a site in the Brisbane CBD, another in Sydney’s Clarence Street and 522 Flinders Lane in Melbourne, which adjoins 567 Collins Street.
Selling the building interests would also leave Investa cashed up in the event that corporate activity threw up the opportunities next year.
While leasing conditions remain tough and office valuations have been clipped by the pandemic, premium buildings are trading well with offshore groups dominating.
The Chinese sovereign wealth fund has swooped on a half stake in Sydney’s landmark Grosvenor Place in a deal valuing the entire tower at about $2bn.
The top end of the market appears to be moving separately to lower grade buildings which may be more affected due to the vulnerability of their tenants to a recession, whereas large groups have the best of corporate Australia as tenants.
Local office owners are chasing partnership-style deals with offshore capital. In these tie-ups the Australian companies develop and manage buildings while international groups keen to get into Australia, partly as other parts of the world are more deeply affected by the coronavirus crisis, take passive stakes.
If Investa decides to sell it could offer stakes of up to 50% in 135 King and 1 Market streets and a quarter interest in 400 George Street.
The King Street tower is in the heart of Sydney’s CBD, surrounded by high-end retail stores and global brands on Castlereagh Street and the adjacent Pitt Street Mall.
The building incorporates international retail brands H&M and Zara Home below 23 levels of office space. The 27,252s m of A-grade office space offers 1200sq m floor plates.
The Market Street asset is a 32-level office building with a three-level podium and ground floor retail complex. The A-grade building has 29,492sqm of total net lettable area.
The George Street building has 51,034sqm of space.
