Korea’s NPS Acquires Melbourne Quarter Tower From Lendlease for $900M

The National Pension Service of South Korea has acquired a 100 percent interest in the 34-storey Melbourne Quarter Tower from Australian developer Lendlease for a reported A$1.2 billion ($900 million).

The largest and last of three office towers in Lendlease’s Melbourne Quarter precinct, the under-construction Melbourne Quarter Tower will be managed on behalf of the NPS by Lendlease Funds Management, Sydney-based Lendlease said in a press release.

The A$1.2 billion figure was disclosed by the Korea Economic Daily, among other media outlets. Private health insurer Medibank will be the anchor tenant of the Woods Bagot-designed tower, which is due for completion in 2024.

“We’re delighted to welcome NPS and Medibank to Melbourne Quarter, with Melbourne Quarter Tower set to complete the city’s market-leading commercial precinct,” said Kylie Rampa, group chief of investments at Lendlease. “NPS is a valued client of Lendlease Funds Management and we’re pleased to expand on our strong relationship by acting as their investment manager for Melbourne Quarter Tower.”

New Landmark

Situated directly across from Southern Cross railway station in Australia’s second-biggest city, Melbourne Quarter Tower will provide office space for 15,000 workers and 3,000 square metres (32,292 square feet) of public spaces with retail.

Rounding out the Melbourne Quarter set are two completed towers: the 13-storey One Melbourne Quarter, acquired by Lendlease-managed property trust APPF Commercial in 2016, and the 25-storey Two Melbourne Quarter, jointly acquired by APPF Commercial and pension fund First State Super (now known as Aware Super) in 2018.

Once complete, Melbourne Quarter will comprise 150,000 square metres of office space across the three towers, two residential towers with 1,500 apartments and 40 retail shops.

NPS, which with over $620 billion in assets is one of the world’s largest pension funds, acquired its first Australian office building in January 2010 with the A$685 million purchase of the 44-storey Aurora Place office tower overlooking Sydney Harbour from Commonwealth Property Investment Trust.

“Melbourne Quarter Tower is the culmination of NPS’s endeavour in executing its build-to-core investment strategy to acquire premium quality commercial assets with high sustainability features,” said Scott Kim, head of the real estate investment division at NPS.

Office Interest

The Australian Financial Review reported on Monday that foreign investors spent almost A$2 billion on office assets across Aussie cities during the first six months of 2021.

Citing research by property consultancy JLL, the report said total investment in Australian offices from January to June hit A$5.02 billion, up smartly from A$4.23 billion during the same period of 2020. Sydney led by far with A$2.08 billion in transactions, followed by Melbourne’s A$1.41 billion and Brisbane’s A$1.11 billion.

Australia’s largest office deal of 2021’s first quarter was the $800 million acquisition of Martin Place South Tower in Sydney’s CBD by a joint venture of Investa Property Group and Manulife Financial from Macquarie Group, according to Real Capital Analytics data. Construction of the Macquarie-developed project is expected to conclude in 2024.

Big first-quarter deals led by foreign investors included Singapore’s Mercatus Co-operative joining forces with Australia’s Dexus to buy a 33.3 percent stake in 1 Bligh Street in the Sydney CBD for A$375 million, as well as Singaporean sovereign wealth fund GIC agreeing to acquire a quarter-stake in the One The Esplanade office tower in Perth from Canadian asset management firm Brookfield for A$220 million.