Offshore investors target Aussie office bargains
Singaporean sovereign wealth fund Government Investment Corporation has kept up its property buying spree during the coronavirus pandemic, picking up a half stake in a Melbourne office tower in a deal valuing the building at about $410 million.
Offshore investors are still buying in Melbourne with the bargain-hunting getting under way as they look to capitalise on buildings that are being offered as the heat comes out of the market, although deep price cuts are yet to occur.
In an under-the-radar deal, GIC picked up a half interest in 222 Exhibition Street for $205.675 million, after it made an “off-market” approach. The interest was acquired from US investment house LaSalle Investment Management acting on behalf of pension group CalSTRS.
LaSalle had paid an AMP Capital-run fund $231m for the 30-level office building in 2015, so it made a profitable selldown of the half stake. The buy showed only a slight value slip since the coronavirus crisis hit the office market.
The A-Grade tower sits in Melbourne’s northeastern precinct and the building’s major tenants include the Victorian government, with 59% of the space, and co-working company WeWork, that has about 17% of the space.
About 11% of the income is derived from a lease to Secure Parking, which operates 478 bays, and both this element and the co-working group are under pressure, with WeWork saying it was seeking relief from landlords.