Singapore’s Ho Family Buying Sydney Office Tower From Dexus For $62M

Singapore investors continue to shop for office building bargains Down Under, with members of the city-state’s Ho clan acquiring an commercial tower in North Sydney from a fund managed by Dexus for A$95.5 million ($62 million), Mingtiandi has learned.

In a deal expected to be completed before the end of March, Dexus is disposing of 124 Walker Street, an 18-storey office block near the North Sydney Oval on behalf of its Wholesale Australian Property Fund, with the deal pricing the Grade A property at 20 percent below its A$120 million valuation in June of last year, according to company records.

The purchase led by brothers Ho Ninghao and Ho Ningchi, adds to the holdings of the family led by their father, long-time Australian property investor Ho Whye Chung and his brother Ho Whye Tong. Ho Whye Chung first made news in Sydney in 1981 when he teamed with Tai Tak chief and UOB shareholder Ho Sim Guan to purchase the Hyatt Kingsgate at King’s Cross.

The Ho family purchase of 124 Walker from an unlisted Dexus trust emerges just days after reports surfaced that the manager of SGX-listed Keppel REIT is in talks to buy a half-stake an office block near Sydney’s Circular Quay from a price potentially 20 percent below the asset’s valuation.

Value-Add Opportunity

The Ho family is paying roughly A$806.6 per square foot for 124 Walker’s 118,400 square feet (11,000 square metres) of net leasable area, with the property occupying the corner of Walker and Berry Streets near the new Victoria Cross Station.

Dexus records show the 1974-vintage building as 68 percent occupied as of September with a weighted average lease expiry of 1.8 years. The Ho family aims to improve leasing in the property, per an account in The Australian, which first reported the asset sale.

Among the 22 tenants currently occupying 124 Walker are software solutions provider Professional Advantage and educational software firm, 3P Learning, according to online listings. Property consultancy Stanton Hillier Parker advised on the 124 Walker office sale.

In addition to participating in the 124 Walker acquisition, Ho Ninghao is a director at American property investment firm Sentinel Real Estate where he leads business development for the firm in Asia.

An Asian Empire in Australia

Ho Whye Chung and Whye Tong have been investing in hotels and other real estate in Australia since the 1980s, with their portfolio now also spanning Singapore, Kuala Lumpur and Hong Kong, based on local media accounts.

Among Ho Whye Chung and Whye Tong’s early investments in the 1980s was the Birkenhead Point shopping complex in the inner west Sydney suburb of Drummoyne, about 10 kilometres west of 124 Walker Street, with that property now held by Mirvac.

Ho Whye Chung and his brother sold a half-stake in the Hyatt Kingsgate to City Developments Ltd in 1994 for A$40 million, before that property was redeveloped into a residential project in 2006, according to local press accounts.

Among the clan’s recent divestments was a six-bedroom mansion in Sydney’s affluent Bellevue Hill suburb, which Ho Whye Chung sold in 2021 for A$26 million.

Value Slide Hits Home

The 124 Walker St asset is one of three office assets Dexus is offloading from its Wholesale Australian Property Fund in a move that will reduce its office allocation to 22 percent from 37 percent three years ago, the firm said in a quarterly performance report.

It added that the trio of divestments will also boost the average lease expiry of the vehicle’s portfolio as well as “improve the capital management strength of the fund.” The vehicle, which has a A$2.15-billion portfolio, was part of A$28-billion real estate and local infrastructure assets which Dexus took over from AMP Capital last year.

The country’s largest office landlord swung to a net loss after tax of A$597 million in the six months ended December 2023 from its A$23 million profit a year ago, as the valuation of its investment properties continued to slide, the ASX-listed firm reported Wednesday.

CBRE data shows office vacancy in Sydney’s central business district rose to 12.2 percent at the end of 2023, from just 11.3 percent at the start of the year, after the market shrank by 1.12 million square feet as tenants reduced footprints.

Trading of office assets has also stayed muted across the country, with data from MSCI showing investment in income-earning real estate assets in Australia plunging 56 percent year-on-year to $16.5 billion in 2023.