Singapore Land Confirms $352M Buy of Brookfield’s Sydney Office Tower

SGX-listed Singapore Land announced late Friday that it has teamed up with another unit of its parent firm, UOL Group, in an agreement to buy a half-stake in a Sydney office tower from Brookfield Asset Management.

The UOL Group subsidiaries have agreed to pay A$460 million ($352.4 million) to acquire 388 George Street in Sydney’s central business district, Singapore Land said in a statement to the Singapore stock exchange.

The deal for the freehold property was the second acquisition of a Sydney office asset announced last week by Singaporean investors, following a statement by Metro Group on Wednesday that it had teamed up with its compatriots at Sim Lian Group to purchase 1 Castlereagh Street in the central business district.

“The acquisition of Brookfield’s 50 percent stake in 388 George Street is the latest example of high conviction Asian capital in the Australian office market, which is showing some of the best risk-adjusted returns in APAC,” said Andrew Hunter, director for international capital with CBRE, which co-managed the sale of the building with JLL. “The settlement of 388 George Street will see total YtD Sydney CBD office transactions equate to A$3.59 billion, a 16 percent increase from this time last year.”

Bought, Fixed and Sold

The pair of Singaporean purchases comes as average yields on prime Sydney office investments climbed to 6 percent by August, according to a report last month by Knight Frank.

The agreement for the 41,098 square metre (442,375 square foot) property values 388 George Street at A$22,385 per square metre, with Singapore Land describing the deal as, “in line with the Company’s plan to diversify its income streams.”

The grade A commercial tower occupies a 3,353 square metre site located between Hyde Park and the Sea Life Aquarium in Sydney’s traditional downtown area. The remaining 50 percent interest in the 28-storey tower at the corner of George and King Streets is held by Investa Gateway Office, a joint venture between Canada’s Oxford Properties Group and Hong Kong-listed Link REIT.

In announcing the purchase agreement, Singapore Land noted that the 1982-vintage property had been fully refurbished in 2020. Following that enhancement programme, the building was fully leased as of 30 September at a weighted average lease expiry by income of around 6.2 years, according to the statement.

With 3,654 square metres of retail below the building’s 37,444 square metres of office space, 388 George Street is home to Cartier’s Australian flagship store, with the refurbishment programme having added a range of on-site amenities to the building, including end-of-trip facilities, a café and a rooftop restaurant and bar in addition to the retail space.

Brookfield had launched an expression of interest campaign for  its 50 percent stake in the building seven months ago, engaging brokerages CBRE and JLL to find a buyer for the interest.

At the time that the asset was put on the market, JLL head of capital markets for Australia Luke Billiau noted that 388 George Street was leased to tenants including pension fund manager Aware Super and insurer QBE, with 80 percent of the building leased beyond 2030.

The commercial tower received a 5.5 Star rating on Australia’s NABERS scale for its indoor environment and a 5.0 Star ranking on NABERS energy scale as well as a core gold certification under the WELL regimen for healthy buildings. Brookfield representatives declined to comment on the transaction.

Market Upswing

The A$6.1 billion in office assets sold across Australia in the first nine months of 2024 is up 61 percent from the same period last year, according to JLL, with the property consultancy pointing to overseas investors driving the rebound, with two of the top three office trades in during the third quarter.

Among those deals are the pending A$395 million acquisition of 333 George Street by Germany’s Deka and Asian private equity firm PAG’s acquisition of 367 Collins Street for A$315 million in a deal which closed in July.

JLL’s Billiau pointed to the third quarter figures as extending an ongoing upswing and as further evidence of how the country’s capital markets are recovering.

“Momentum is clearly building across commercial property sectors and the office sector has been a major beneficiary. As we expected to see at the beginning of 2024, this reflects a higher conviction in the market and greater clarity with pricing,” Billiau said.

From Singapore to Sydney

Singapore Land, which is majority owned by UOL Group, said that it holds an 80 percent stake in the joint venture purchasing the property, with a unit of UOL Group holding the remaining 20 percent. The transaction is expected to be completed in the first half of 2025.

The company explained the joint venture with its parent as enabling it, “to mitigate risks and take on more projects to diversify its property portfolio and tap on the expertise and network of its joint venture partner.

Following the transaction, 388 George Street will continue to be managed by Australia’s Investa, with UOL’s half stake in the building to be held in a trust, according to a report in the Australian Financial Review.

The deal gives Singapore Land, which is chaired by UOL chairman Wee Ee Lim, its first office  property in Australia with the company also holding full or partial stakes in seven Singapore office buildings, including the newly remodelled Singapore Land Tower in Raffles Place and Holborn Island  in London, according to its website.

An Australian joint venture of Singapore’s Metro Holdings and Sim Lian Group paid A$196.4 million to acquire 1 Castlereagh Street from Early Light International, a Hong Kong firm controlled by toy tycoon Francis Choi in the deal announced last Wednesday.

That deal came after First Sponsor, an SGX-listed company backed by Singaporean giant City Developments Ltd in July completed a $16 million acquisition of the Tattersalls Club in Sydney’s central business district, with plans to develop a 50-storey residential and hotel project around the heritage building.

In April, Singapore-listed Keppel REIT agreed to acquire a 50 percent stake in 255 George Street, around 550 metres (601 yards) from 388 George Street, from a fund managed by Mirvac for A$363.8 million.  In February of this year a wealthy Singaporean family acquired 124 Walker Street in North Sydney for A$95.5 million, with that price representing a 20 percent markdown from the property’s valuation in June of 2023.