Aware has bought a stake in 100 Market Street, Sydney. Picture: Supplied
The giant Aware Super is backing the recovery of the top end of the office market with its real estate unit inking a deal to take a 50 per cent stake in a tower next to Westfield Sydney for about $226m.
The move on 100 Market Street will expand its Australian office portfolio at a time when major superannuation funds are emerging as drivers of the market, although they are focused on premium towers.
Big funds are betting on a pick-up in Sydney’s office markets, and last year 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’s interest in the tower was flagged by The Australian and it is setting up a new partnership with Hong Kong’s Link Asset Management, which will retain a 50 per cent interest in the Market Street building.
The offshore group had bought the 10-storey, A-grade offices from private equity group Blackstone for $683m in 2019, with that pricing showing pre-coronavirus crisis metrics.
Cushman & Wakefield and Knight Frank handled the latest sale, which showed a capitalisation rate of close to 6.5 per cent.
The building is one of Sydney CBD’s premier commercial assets and spans 28,339sq m of office space, with top tenants including the Scentre Group, the Australian Securities & Investments Commission and the Future Fund.
The asset is integrated with Westfield Sydney, is well connected to transport, and sports strong sustainability credentials.
Aware Real Estate, the property operating platform set up by Aware Super, had been looking to add to its directly owned office portfolio and it targets high-quality institutional assets capable of delivering long-term performance.
Aware Real Estate head of investments and capital transactions Pete Carstairs said 100 Market Street was a high-quality CBD office asset that aligned strongly with the group’s long-term investment strategy and commitment to delivering sustainable value for investors.
Citing the tie-up with Link, he said the pair looked forward to “stewarding the future of this asset through a collaborative partnership focused on long-term performance, tenant outcomes and value creation”.
Aware Super head of property Alek Misev said the move reinforced the fund’s conviction in Australia’s premier office market. The real estate unit’s portfolio of high-quality office assets, includes 145 Ann Street in the Brisbane CBD and 207 Pacific Highway in St Leonards.
“This was a rare opportunity for the Aware Real Estate platform to acquire a high-quality Sydney CBD office asset with cornerstone government and corporate tenants. Ideally located near transport and retail amenities, the building is well positioned to remain in demand through market cycles while appealing to a diverse range of businesses,” he said.
“The 100 Market Street investment also reflects our continued confidence in the long-term strength of the Sydney CBD office market, where we continue to see opportunities to invest in high-quality institutional assets with strong tenant demand and enduring fundamentals,” he said.
Link chief investment officer John Saunders said the transaction brought together complementary strengths and long-term capital, positioning the asset to deliver enhanced performance on behalf of its investors.
The offshore group is refocusing on owning and managing retail assets across the Asia Pacific, with Mr Saunders saying the transaction allowed the group to reduce its exposure while establishing a new capital partnership.
“We intend to use proceeds for both unit buybacks, subject to regulatory requirements and market valuation, as well as to reinvest into our core retail portfolio in APAC in line with our back-to-basics approach,” he said.
Link head of Australian investments Julian Menegazzo said the group had set up a new strategic partnership with Aware Real Estate, jointly overseeing 100 Market Street. “This transaction brings together complementary strengths and long-term capital, positioning the asset to deliver enhanced performance on behalf of our investors,” he said.