This article is from the Australian Property Journal archive
MIRVAC has wrapped up $1 billion in asset sales after divesting a majority stake in a $2 billion Sydney development to Japanese property developer Mitsui Fudosan.
The group has unconditionally exchanged contract on a circa 66% stake in 55 Pitt Street office development in the Sydney CBD to Mitsui Fudosan Australia.
Founded in 1941, Tokyo-headquartered Mitsui Fudosan is Japan’s largest diversified property developer and is listed Tokyo Stock Exchange with a market capitalisation of JPY4.13 trillion (approximately AUD$38.50 billion).
The company is a trailblazer, responsible for developing Japan’s first office skyscraper in 1968, The Kasumigaseki Building.
It followed up developing the country’s first regional shopping mall in 1981 and the first factory outlet 1995.
But it is most famous for developing the iconic theme park, Tokyo Disneyland in 1968, through the Oriental Land Company, which at the time was the first Disneyland theme park outside of United States.
The Japanese developer has projects in New York, Los Angeles, Honolulu, Shanghai, Taiwan, Kuala Lumpur and Sydney, with interests diversified across office, hotels, retail and logistics.
The 55 Pitt Street property was valued in Mirvac’s books at $109 million in 2023 and at $252.5 million in 2022.
The project, which has an estimated end value of circa $2 billion, will be delivered as a joint venture development, with Mirvac to co-own, develop and construct the building.
This transaction comes hot on the heels of Mirvac selling 40 Miller Street North Sydney and 367 Collins Street in Melbourne last month for a combined $485 million.
Both deals were struck at a 20% discount to peak book values.
These three sales follow a string of transactions last month which has injected activity into the office market after a quite start to 2024.
Although vendors are accepting deep discounts to get deals across the line, with Dexus selling a Parramatta office building for $69.1 million, which was valued at almost $190 million as at June 2021.
Last week Dexus and pension fund the CPP Investment Board sold 5 Martin Place in the Sydney CBD for $296.2 million to Cbus Property. The sale is below the June 2023 valuation of $380 million and the peak of $405 million in June 2022.
Meanwhile under the partnership agreement with Mitsui Fudosan, Mirvac will take on leasing, investment and property management services for the asset upon completion.
Mirvac also completed its sale of the Aspect South Industrial precinct in Sydney into the Mirvac Industrial Venture (MIV), with Australia Retirement Trust (ART) acquiring a 49% interest.
The transaction of Aspect South Industrial precinct brings MIV’s total expected end value circa $1 billion.
The group also reaffirmed its operating earnings guidance to 14.0-14.3 cents per stapled security in FY24 and distribution to 10.5 cents per stapled security.
