This article is from the Australian Property Journal archive
EXCLUSIVE: MULTIPLEX scion Andrew Roberts’ property funds platform RF CorVal has divested a Perth office tower for about $75 million, and while it shows that revaluations continue to roll through the sector, the gap and between buyers’ and sellers’ expectations is narrowing, and deals are getting done.
The A-grade 66 St Georges Terrace tower rises 11 levels and has some 11,444 sqm of floor space. In 2019 it became the first asset of Canadian group Oxford Properties’ $1 billion portfolio optimisation program to be sold off, selling to property funds house RF CorVal in a $72 million deal.
At the time, it was a premium to the book value of $65 million, but a notable distance from the $82.4 million Investa paid for it, before Investa was taken on by Oxford Properties.
Industry sources confirmed to Australian Property Journal that CorVal has offloaded the asset for $75 million, to Oceania Capital
Five years is a long time. COVID and the seismic structural fallout of working from home and flexible working caused a reset in values and a freeze in transactions that has begun to thaw. Buyers and sellers are now seeing more closely eye-to-eye. Investment volumes across Australia’s CBD office markets are up 21% over 2024 to date, moving in line with improved sentiments across the beleaguered sector.
Western Australia had a slightly different experience to its eastern seaboard counterparts. Due to the strength of its economy, Western Australia saw limited fallout from the pandemic and a number businesses expanded, leading to a rebound in leasing activity and the vacancy rate tightening from 19.9% in January 2021 to 15.5% in July this year, according to the Property Council of Australia.
MSCI’s head of Pacific real estate research, Benjamin Martin-Henry recently told Australian Property Journal, “We’re seeing a lot more transactions in the office sector, and that’s not necessarily because of stability in the interest rate environment.
“It seems to be that a lot of investors are trying to get out of the office sector, or at least get them off their books in order to recycle capital into something else, and what we’re seeing is other investors take advantage of these discounts that are on offer.”
Over on the eastern seaboard, deals continue to be struck at discounts. Sentinel this week paid $72 million for Canberra’s A-grade, Commonwealth government-leased 18 Canberra Avenue, 34% below the replacement cost from Charter Hall, who purchased the asset from Doma Group in 2021 for $98.5 million. Last month, a joint venture between Singapore-listed companies UOL Group and Singapore Land Group confirmed its acquisition of Brookfield’s half-stake in Sydney office tower 388 George Street at $460 million on a softened yield of around 6.2%.
That came hot on the heels of Hong Kong toy billionaire Francis Choi copping a loss in the $196.4 million sale of the 1 Castlereagh Street building in the heart of Sydney’s CBD. Choi’s off-market divestment was struck at more than 10% below the $220 million-plus he paid Blackstone for the asset late in 2017, and he spent a further $37 million adding two storeys of penthouse offices, upgrades, and additional retail space.
Larger deals in the office sector this year, such as 5 Martin Place and 52 Martin Place in Sydney, and Mirvac’s divestments of 40 Miller Street, North Sydney and 367 Collins, Melbourne have also gone at significant discounts.
Dexus – Australia’s biggest owner of office tower – is currently looking to diversify its portfolio, after heavy exposure in the office sector dragged the company to a $1.58 billion loss result in FY24. It recently announced it was teaming up with Marquette Properties to repurpose a B-grade office tower in Brisbane’s CBD into a $500 million purpose-built student accommodation facility with 1,200 beds, while it is also selling offices in Melbourne.
