Link REIT is selling 100 Market Street, Sydney. Picture: Supplied
Superannuation giant Aware Super is targeting the purchase of an office block in Market Street in the heart of Sydney’s central business district in a sign that large local players are getting back into the market.
The super fund is eyeing the purchase of 100 Market Street from Hong Kong heavyweight Link Real Estate Investment Trust for more than $500m, industry sources say.
The move would boost Aware’s exposure to the recovering office market and add to its portfolio, which includes a building in Brisbane and a series of offshore plays in offices and logistics.
The impending purchase also marks a switch away from a previously mooted play that would have seen Aware Super strike a deal with property developer Lendlease and take a 75 per cent interest in the near-complete Victoria Cross Tower in North Sydney.
That deal had been expected to be a benchmark sale for this part of the cycle as superannuation funds are more active and confidence in premium offices grows, even as the lower end of the market falls away.
Big capital is active. 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. Singapore’s OUE REIT also snapped up a 19.9 per cent stake in Salesforce Tower for $357m.
Link Real Estate Investment Trust put the office building in the heart of Sydney’s CBD on the block in February.
Link REIT is selling 100 Market Street, Sydney. Picture: Supplied
Link offered 100 Market Street – which houses both the corporate regulator ASIC and Scentre, owner of the Westfield empire – as office deal-making has also included Charter Hall and Centuria getting active.
Cushman & Wakefield’s Josh Cullen and Knight Frank’s Rob Sewell are handling the sale but they and the parties declined to comment.
Big-ticket office deals are back on the agenda as global buyers target Sydney for the growth it offers, after values took a hit during the pandemic and as interest rates lifted. While headline vacancy rates remain high, demand for premium assets has risen at a time when fewer assets are being developed.
Link bought the 10-storey, A-grade office tower from private equity group Blackstone for $683m in 2019, with that pricing reflecting pre-coronavirus crisis metrics.
It has switched focus to retail assets locally. Five years ago, it acquired a 50 per cent stake in the Queen Victoria Building, The Strand Arcade, and The Galeries in Sydney for $538.2m. The Hong Kong group also made a play last year for three shopping centre assets under the Lendlease APPF Retail banner. But that fund was instead recapitalised by Cbus Property.
The Market Street block sits in a prime spot as part of the broader footprint of Westfield Sydney. Scentre sold off the office towers it developed to US private equity group Blackstone for about $1.5bn before that group later onsold 100 Market Street to Link.
The 28,385sq m property is fully occupied by its three blue-chip tenants, the Future Fund alongside ASIC and Scentre.