Singapore’s Ascendas-Singbridge is buying a landmark office tower in downtown Sydney for A$252 million ($200 million), marking its second office acquisition in Australia.
The state-backed commercial developer announced to the Singapore stock exchange on Friday that it has agreed to acquire 66 Goulburn Street, a 24-storey building in the city’s Midtown precinct, from ASX-listed GDI Property Group.
Ascendas-Singbridge, which is best known for its business park projects, won out over strong competition from international groups for the asset, amid a hot office market in Sydney that is seeing surging office rents, low vacancies, and sustained investment demand.
Ascendas-Singbridge Picks Up a Landmark Sydney Address
Known as Civic Tower, 66 Goulburn Street is a grade A tower completed in 2004, providing around 22,929 square meters of lettable office space and a ground-floor retail tenancy. The building features floor-to-ceiling windows and 360-degree views of Hyde Park, Sydney Harbour and Darling Harbour. The tower is nearly fully leased with major tenants including Samuel Griffith Chambers, Prudential Investment, the New South Wales government and a Masonic centre on the street level.
The asset “represents an attractive investment proposition against the backdrop of office supply removal in the midtown precinct due to residential conversions and limited new office supply across Sydney CBD over the next few years,” commented Jonathan Yap, Chief Investment Officer and Head of Real Estate Funds at Ascendas-Singbridge in the statement. “Hence, market rental growth is forecast to remain strong for the mid-term with decreasing rental incentives.”
The building, which was marketed as having a net income of A$14.4 million ($11.4 million) in its most recent fiscal year, is said to benefit from having an average lease expiry of over five years. GDI purchased the property in 2014 for A$136 million and invested in repositioning the asset, enabling it to lease out vacant space and significantly boost rents, according to market reports. The property and fund management group expects to make a profit of around A$228 ($180.9) on the sale to Ascendas-Singbridge, which is being handled by Knight Frank and CBRE.
The building has benefited from the development of the surrounding neighborhood of Sydney since it last changed hands. The area has a variety of retail, entertainment, and food and beverage venues and is accessible to the nearby Museum and Town Hall railway stations. The location also stands to gain from the upgrading of Sydney’s public transit system, including the Sydney Metro and Light Rail projects and other urban renewal efforts to be delivered over the coming decade.
Singaporean Player Expands Aussie Portfolio
Ascendas-Singbridge had been actively looking to expand its Aussie office portfolio after buying its first office building in the country last year. The developer jointly owned by Singapore’s Temasek Holdings and JTC Corporation picked up 100 Arthur Street, a 20-storey, grade A building in North Sydney for an undisclosed sum in March 2016.
The 27,000 square metre tower nearby the Sydney central business district was renamed Ascendas Innovation Place. The acquisition followed the group’s first venture into Australia when Ascendas REIT (A-REIT), a Singapore-listed trust, purchased a portfolio of 26 logistics assets in the country for around A$1 billion in November 2015.
The latest acquisition of 66 Goulburn Street brings Ascendas-Singbridge’s pan-Asian portfolio to a total of 312,000 square metres of office assets and another 75,000 square metres under development across Sydney, Singapore, Seoul and Shanghai.