Singaporeans buy Woolies’ Sydney HQ

Supplied Editorial Korean group Inmark is selling the Woolworths headquarters for more
 than $400m

South Korean-Australian group Inmark has sold the Woolworths headquarters at Bella Vista in Sydney.

The Woolworths headquarters in Sydney’s northwestern suburbs has sold for a massive $463.25m to a Singapore-listed real estate trust with the deal signalling the office market is up and running again.

The purchase firmly kicks aside fears that the coronavirus crisis would deeply hurt office markets as workers are expected back at work in coming months.

Offshore buyers are also buying up assets as they have seen offices fill up again offshore despite some ongoing restrictions and delay in returning staff.

The property was put on the block mid-year and the purchase by Singapore’s AIMS APAC REIT showed a healthy uplift from when the building traded five years ago to a group of South Korean investors, who paid $336.45m.

The buyer pitched the deal as deepening its holdings in Australia. It already owns the Optus headquarters at Macquarie Park in Sydney’s northern suburbs and is so keen on its new purchase it also flagged a dramatic expansion of the supermarket HQ.

The corporate campus is fully leased to supermarket giant Woolworths, which has a long lease term balance of ten years and built-in rental escalation of 2.75 per cent per annum.

The buyer said the nine hectare freehold site had future redevelopment potential to expand the current building footprint of 44,972sq m to a maximum gross floor area of 180,000sq m.

The deal was struck on a yield of 5.17 per cent, a level showing that global capital will pay up for local assets.

James Parry, Flint Davidson, Stuart McCann and Michael Andrews of CBRE and Adam Woodward, James Mitchell and James Barber of Colliers handled the deal.

“This proposed acquisition will strengthen AA REIT’s foothold in Sydney’s resilient business park market. The precinct is also home to a thriving community of established domestic and multinational corporations such as Australia Post, Resmed, IBM and Optus and data centres for the RBA and Commonwealth Bank,” the AA REIT manager’s chairman, George Wang, said.

Woolworths HQ is a campus comprising three multi-level interconnecting buildings, housing office accommodation, a data centre operation and amenities.

AA REIT bought the Optus Centre in Macquarie Park, Sydney, in 2014. It said apart from being able to benefit from annual rental escalations and long-term capital appreciation, there was “immense potential” to unlock value as the property was designed to cater for future site expansion for additional buildings.

The Woolworths HQ was constructed in 2005 and has a total site area of 90,010sq m, with a total net lettable area of 44,972sq m. The development potential could see the buildings grow to about 180,000 sqm based on the maximum allowable gross floor area.