This article is from the Australian Property Journal archive
A JOINT venture between Singapore-listed companies UOL Group and Singapore Land Group (SingLand) has confirmed its acquisition of Brookfield’s half-stake in Sydney office tower 388 George Street at $460 million.
The deal has been long-mooted in property circles and comes in on a yield of around 6.2%, reflecting the softening in office values in recent years as the sector faced structural headwinds.
388 George Street is an A-grade 30-storey commercial building with two-storey basement parking and five-storey retail and commercial podium building that includes luxury retail giant Cartier’s flagship Australian store. Office tenants QBE, Aware Super and co-working operator The Commons. Cartier and The Commons joined on the back of a $200 million refurbishment of the tower in 2020.
Located on a 3,353 sqm site at the corner of George Street and King Street, the 28-storey tower has a weighted average lease expiry by income of around 6.2 years.
UOL Group and SingLand join Investa Gateway Office Fund, owned by Oxford Properties and Hong Kong’s Link REIT, as co-owners of the tower. Investa will manage the tower. Link REIT acquired a 25% share as part of its $1.131 billion acquisition of a portfolio of five towers in Sydney and Melbourne in early 2022.
UOL holds 50.37% of SingLand’s shares.
UOL said the acquisition is in line with the group’s plan to “diversify its presence in Australia and to strengthen recurring income streams”.
SingLand stated that the acquisition is in line with its plan to diversify its income streams.
“The joint venture with UOL will enable SingLand to mitigate risks and take on more projects to diversify its property portfolio and tap on the expertise and network of its joint venture partner,” it said.
Falling values
The transaction arrives after a sustained period of falling values in the office sector, crystallised by a recent run of deals. Hong Kong toy billionaire Francis Choi has just copped a loss in his $196.4 million sale of 1 Castlereagh Street 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 had spent a further $37 million adding two storeys of penthouse offices, upgrades, and additional retail space.
Meanwhile, Cbus Property is spending $310 million to acquire a 50% share of 5 Martin Place in the Sydney CBD, as reported by Australian Property Journal. That tower had previously shown a valuation of $405 million two years ago.
Mirvac has just divested the 40 Miller Street, North Sydney office building to Barings for $140 million, and 367 Collins Street in Melbourne for $345 million, with both deals struck at a 20% discount to peak book values.
