Link REIT acquires $538.2m stake in the Queen Victoria Building
Hong Kong-based real estate investment trust, Link REIT, has acquired a stake in three Sydney CBD shopping malls in a deal valued at $538.2 million.
The landmark sale will see Link REIT acquire a 50 per cent stake in the Queen Victoria Building (QVB), The Strand Arcade and The Galeries.
The heritage-listed QVB is the second most visited landmark in Sydney after the Opera House and is Australia’s largest Victorian Arcade.
The purchase of the stakes in the three complexes from Singaporean sovereign fund GIC comes as NSW accelerates plans for economic reopening following a lengthy lockdown.
The deal, struck on a core capitalisation rate of 5.00 per cent, is Australia’s largest CBD shopping centre transaction since late 2017, when Vicinity Centres acquired the other 50 per cent interest in the same trio of centres, which it continues to manage.
CBRE head of retail capital markets Simon Rooney said the transaction was expected to drive further confidence into Australia’s retail investment sector with it demonstrating institutional demand for core retail assets and confidence in CBD retailing.
“Assets of this scale, quality and reputation are rarely sold and in the case of The Queen Victoria Building (QVB), The Strand Arcade and The Galeries,” he said.
“These iconic centres are regarded as among the best in Australia and dominate Sydney’s core retail precinct, which is positioned for recovery following the end of lockdowns, as workers, tourists and shoppers return to the CBD.”
CBRE data shows almost $4.52 billion flowed into Australian retail investments in Q2 and Q3, up 118 per cent on the same period last year.
That momentum has continued into Q4, with Vicinity’s $358 million acquisition of a half share in Harbour Town Gold Coast for $358 million from the Lendlease managed APPF R and a $2.2 billion deal between Cbus Property and AMP Capital for Pacific Fair on the Gold Coast and a half stake in Sydney’s Macquarie Centre.
The acquisition of the 50 per cent stake in the QVB, The Strand Arcade and The Galeries represents the latest investment in Australia for Link REIT, following its $683 million purchase of Sydney’s 100 Market Street office tower two years ago.
The Queen Victoria Building has one of the largest footprints in Sydney’s core retail precinct with almost 200m of frontage onto George St, while The Strand is the only remaining arcade of its design in the CBD and The Galeries is a lifestyle and cultural destination for fashion and dining that offers a unique shopping experience.
The assets have a gross lettable area of 34,877sqm and comprise 334 tenants, 46.1 per cent of which are unique and do not have another store in Sydney’s CBD.