Singaporean sovereign wealth fund GIC has bet big on the office market recovery, swooping on a Sydney tower on Market Street in a $450m deal.
The counter-cyclic play for 1 Market Street is being handled by property fund manager Investa, which is acting for a fund that the Asian heavyweight is backing.
It declined to identify the party but GIC is understood to have committed to the unlisted trust years ago, awaiting an opportunity to get into the office market.
The sovereign fund is moving as billions of dollars of stock are hitting the market across the eastern seaboard capitals, with several drivers prompting landlords to sell. Those offering buildings include Dexus, AEW, LaSalle, MEC and Marquette Properties, along with a host of smaller players.
Fund managers who bought earlier in the property cycle, before the Covid pandemic, had been waiting for an even larger recovery to materialise.
But this was set back by geopolitical uncertainty and rising interest rates.
With these forces now more quantifiable and a recovery emerging at the top end of the leasing market, there is more confidence in office deals completing.
Investa’s main wholesale vehicle, Investa Commercial Property Fund, is selling the long-held building as it is a more value-add style asset, allowing the fund to focus on its premium property portfolio.
ICPF took full ownership of the tower in 2016 when it bought a half-stake for $167.5m, adding to its earlier stake in the complex.
The fund has been active and recently teamed with US investor BGO to acquire a premium tower in Brisbane and it also backed the development of 360 Queen Street in the Queensland capital, alongside Charter Hall.
The 32-level Market Street block has a three-level podium and ground floor retail complex that capitalises on its position between the city’s financial core and Darling Harbour. The A-grade building has 29,453.4sq m of total net lettable area, excellent natural light and a 4.5-star NABERS Energy rating.
GIC is understood to be an existing Investa capital partner and acquired the property in the Investa Core Plus Office Partnership, increasing its exposure to the CBD office market.
ICPF fund manager and Investa head of asset management Brendan Looby said the transaction represented another important milestone in the fund’s portfolio evolution.
“The sale is consistent with ICPF’s strategy of actively curating a market-leading prime office portfolio while creating capacity to capitalise on strategically aligned investment opportunities at an attractive point in the cycle,” Mr Looby said.
For the GIC-backed ICOP, the purchase reflects confidence in Sydney office market fundamentals, with strong leasing demand and limited future supply expected to support rental growth and returns across the medium term. ICOP has further capacity for acquisitions and is chasing opportunities across Australia’s major office markets where attractive risk-adjusted returns can be achieved.
The transaction also highlights improving liquidity across the office sector and institutional demand for well-located, high-quality office assets.
Investa chief investment officer Adam Crowe said the transaction delivered a positive outcome for both investment vehicles and demonstrated the strength of Investa’s integrated investment management platform.
“This transaction provides a successful capital recycling outcome for ICPF investors while creating an opportunity for another capital partner to increase its office exposure to the Sydney CBD market via a quality asset,” Mr Crowe said.
“It reflects sustained institutional conviction in the Sydney office market and demonstrates Investa’s ability to originate and execute investment opportunities that align with the objectives of our capital partners.”
Ben WilmotCommercial Property Editor