The Japanese investor is said to want A$600 million for its share of Salesforce Tower
Mitsubishi Estate is marketing its 30 percent stake in Sydney’s tallest office building, with the Japanese property giant saying it plans to reinvest the proceeds in other projects across Australia.
The Tokyo-based investor owns Salesforce Tower in a joint venture with a Lendlease-managed fund, which holds a 20 percent stake, and China’s Ping An Real Estate, which retains the 50 percent stake it reportedly put up for sale last year.
CBRE has been appointed to conduct the sale process for Salesforce Tower, the consultancy said Wednesday in a release. The 55-storey development at 180 George Street is Sydney’s most recently completed premium-grade office building.
No guide price was disclosed for Mitsubishi Estate’s stake, but the Australian Financial Review put the figure at A$600 million ($394.4 million), citing market sources. That asking price would value the tower at A$2 billion, down from the A$2.2 billion implied two years ago when the project’s developer, Sydney-based Lendlease, sold its stake to its flagship Australian Prime Property Fund Commercial vehicle.
“Selling our stake in Salesforce Tower signifies an important milestone for MEA, marking our first divestment in Australia,” said Yuzo Nishiyama, head of Australia at Mitsubishi Estate Asia. “We have been involved throughout the entire journey of developing this iconic building and it has been tremendously successful for us, with thanks to our partners Lendlease and Ping An Real Estate.”
Near Full Occupancy
Measuring 263 metres (863 feet) in height, Salesforce Tower comprises 53 office floors spanning 59,916 square metres (644,930 square feet), a ground floor lobby and retail plaza of 1,996 square metres and two levels of basement car parking.
Yuzo Nishiyama, head of Australia at Mitsubishi Estate Asia
Software maker Salesforce signed up as the anchor tenant in 2019, and other key occupiers include property consultancy JLL and flexible office provider The Executive Centre. The project has an occupancy rate of 99 percent and a weighted average lease expiry of 6.9 years.
CBRE will accept international expressions of interest for Mitsubishi Estate’s stake until Thursday 26 September.
“This divestment bolsters MEA’s strategic expansion in Australia, where we continue to participate in more development projects across our real estate sectors of focus, including living, office and industrial,” Nishiyama said. “Our conviction for premium grade office development opportunities in the superior locations remains very high as evidenced by our Parkline Place over-station development in the Sydney CBD, which will complete in September this year.”
In 2021, Canada’s Oxford Properties and its Australian operating partner Investa brought Mitsubishi Estate into a joint venture to develop Parkline Place, a 39-storey office building and retail precinct integrated with the future Gadigal metro station and featuring 47,800 square metres of office space and a further 1,290 square metres of retail.
Oz Offices Perk Up
The attempted sale of the Salesforce Tower stake coincides with heightened domestic and international investor interest in Australia’s office market, CBRE said. The consultancy tracked A$4.2 billion in assets that changed hands in the first half of 2024, up 48.1 percent from year-earlier volume.
The office sector Down Under appears to represent the best value in Asia Pacific at the moment, said Stuart McCann, CBRE’s head of international capital and capital advisors for the Pacific and Southeast Asia, who is leading the stake sale campaign alongside Flint Davidson, the firm’s head of Pacific capital markets.
“International interest in the Australian office market, particularly the Sydney CBD, has noticeably improved in the last quarter,” McCann said. “This is being driven by a combination of genuine value emerging, with pricing reverting 20 to 30 percent from the peak, together with continued strong leasing performance.”
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