Asia’s largest real estate investment trust is close to agreeing to its first acquisition outside of Greater China, according to an Australian media report.
Hong Kong-based Link REIT is said to be leading a field of suitors bidding to buy 100 Market Street in Sydney from Blackstone for approximately A$700 million ($481.6 million), the Australian reported last week, after the US alternative investment giant put the office property next to the Westfield Sydney complex up for sale in October.
Should the HK$165.9 billion ($21.3 billion) listed trust follow through on its pursuit of the 10-storey block, it would mark Link REIT’s first acquisition outside of Greater China, after the Hong Kong institution ventured into Beijing in 2015 to make its first purchase beyond its home city.
Link REIT Opens Door to Opportunities Outside Greater China
In response to inquiries from Mingtiandi a spokesperson for Link Asset Management, which manages Link REIT, said that the company does not comment on market speculation.
Referencing Link’s Vision 2025 manifesto introduced by CEO George Hongchoy in June, the representative explained that, “We will continue to seek opportunities to grow in Hong Kong, the four first-tier cities in Mainland China and their surrounding river delta areas and other markets where suitable opportunities arise.”
In Hongchoy’s statement from June, when the company’s Vision 2025 was first announced, the trust manager’s CEO had referenced only opportunities in Hong Kong along with mainland China’s first tier cities and their surrounding regions, without opening the door to other markets.
As of 30 June this year, 86.8 percent of Link REIT’s HK$218 billion in investment properties were in Hong Kong, with the remaining 13.2 percent in mainland China. Within Link’s portfolio, a pair of office buildings in Shanghai’s Corporate Avenue complex near Xintiandi are believed to be the trust’s only pure office assets at this time, with the remainder of its portfolio concentrated in retail properties.
Link Outbidding JP Morgan, Keppel
Blackstone closed bidding for 100 Market Street in Sydney on 12 November, according to Aussie media accounts, with both JLL and Cushman & Wakefield representing the private equity firm in its sale of the property along Sydney’s Pitt Street mall.
Executives at both agencies had not replied to inquiries from Mingtiandi regarding the asset sale before time of publication and Blackstone representatives had also not yet responded.
JP Morgan Asset Management and Singapore’s Keppel REIT are among a number of companies said to have bid on or expressed interest in the 1978 vintage tower, which was redeveloped in 2010 by its former owner, Australia’s Scentre Group.
The grade A complex’ 30,777 square metres (331,281 square feet) of net lettable area are home to the Australian Securities and Investment Commission, the Australian Taxation Office and Scentre Group, with local media accounts indicating that Link REIT would be purchasing the building at around a 4 percent yield. At A$700 million, the trust manager would be acquiring the tower one block west of Sydney’s Hyde Park for A$22,744 per square metre of NLA.
Blackstone Put Sydney Asset on Market After Four Months
Reports first emerged of Blackstone putting 100 Market Street up for sale in October, just four months after the New York-headquartered firm had purchased the tower from Scentre Group in June as part of a three building Sydney set acquired for A$1.52 billion.
Real estate investment trusts and other institutional investors from Asia have helped fuel a surge in Sydney office deals in recent months with Singapore-based fund manager SC Capital having agreed earlier this month to buy 2-10 Wentworth Street in Parramatta for A$105.3 million.
In early November Singapore’s GIC had formed a joint venture with Australia’s Charter Hall to acquire another Parramatta asset, the Jessie Street Centre, from Brookfield for A$415 million. In August, the sovereign wealth fund also bought up just over a quarter stake in a A$4.3 billion ($2.9 billion) vehicle holding three Sydney office properties from Australia’s Lendlease and Canada’s CPPIB.
Another Singapore-based player, ARA Asset Management’s Suntec REIT, acquired an office project in the Sydney suburb of Pyrmont in July for A$297 million.
Link REIT’s most recent acquisition is Shenzhen’s Central Walk Mall, which it purchased for RMB 6.6 billion ($982 million) in February of this year.