We recorded over $30bn of property transactions in the Australian Property Transaction Database in 2016, well in excess of 2015. The bulk of the activity ($13bn) remains in the Commercial sector as local and offshore core investors continue to chase quality yielding assets. 2016 also marked a significant increase in investment in the Development sector at over $6bn in total sales with strong interest amongst Chinese based development groups. The retail sector is always constrained by low volumes of quality stock, however 2016 saw over $4bn of assets change hands thanks to a number of portfolio sales. Top 10 Transactions An examination of the Top 10 investments reveals where the interest in Australian property assets has come from. Blackstone 1. Blackstone’s acquisition of Goodman Industrial Portfolio for $640M – This transaction announced in July 16 included 15 assets (mostly in Vic, QLD and SA) comprising 530,000 square metres and came after a similar sale to Singapore’s Redwood in late 2015 which didn’t proceed allowing cashed up Blackstone to move in quickly. The deal was reportedly struck on a yield of low 7%. Blackstone repeated the same deal for a further 21 assets in November valued at $645M. 2. Blackstone’s acquisition of Vicinity Centres portfolio for $613M – This transaction formed part of a bigger sale by Vicinity Centres in May 2016 of four centres to Mirvac and Blackstone – with Blackstone picking up Clifford Gardens, Forest Hill Chase, and Brimbank Shopping Centre with Mirvac taking Toombul. For Blackstone, these assets add to the Rundall Mall and SCentre portfoio acquired in 2015 and to existing assets at Top Ryde and Greensborough. The AFR speculated in May that Blackstone may seek to list the entire portfolio. Read more about Blackstone’s view on the Australian market in this AFR article. ARA Asset Management 3. ARA Asset Managements acquisition at Southbank complex for $578M – The transaction included 2 office buildings and a 3 level retail complex, comprising approx 76,600 square metres. ARA Asset Management from Singapore acquired the assets from Dexus at a yield of 6.5%. With capital support from Suntec REIT and Peninsula Investment Partners, the transaction was to be settled in two tranches with Dexus managing the asset until settlement completes. Charter Hall / Morgan Stanley 4. Charter Hall / MSREI acquisition of 1 Shelley Street, Sydney for $525M – The sale of this leasehold interest in this asset in May 2016 by Brookfield Office Properties was completed on a yield of 5.3%. The asset is fully leased to Macquarie Bank for 7.5 years. The building comprises a central atrium which many investors shyed way from due to the difficult to convert the asset to a multi tenanted building should Macquarie vacate. Charter Hall are no doubt eyeing the long term potential for the site which at only 11 storeys is dwarfed by Barangaroo Tower next door. AMP Capital 5. AMP Capital’s acquisition of 33 Alfred Street for $430M – This sale, announced prior to Christmas has been mooted for some time. Unlike it,s other property assets, the AMP Group has held 33 Alfred Street for over 150 years on its balance sheet as a testament to its heritage. However the asset became a challenge for AMP Capital’s flagship property funds (AWOF and ADPF) who desperately need to unlock the constraints to the redevelopment of 50 Bridge Street. The transaction includes a pre-commitment by AMP to space in the new 50 Bridge Street. The decision to sell this asset was challenging not just for the heritage value to AMP of its 150 year old head office, but also due to the related party issues in the deal. Investa CPF 6. Investa CPF’s acquisition of 420 George Street for $442M – The sale of 75% of the asset by Fortus was struck at yield of 5.3% (Lend Lease retains 25%) and formed part of a larger deal with the retail assets acquired by NGI Investments for $310m. Challenger / Invesco 7. Challenger and Invesco’s acquisition of 839 Collins Street for $430M – This asset is being constructed by Lease Lease and will comprise 21 levels of commercial space covering 39,000sqm leased to ANZ. Challenger and Invesco will complete the acquisition on completion at a yield of 5.0%, with a fund through arrangement during construction. Greenland & Golden Horse 8. Greenland and Golden Horse’s acquisition of 57 Ashmore Street, Erskinville for $385m – As the largest Development transaction in 2016, the sale by Goodman group for this 7 hectare parcel of land is a strong endorsement of Goodmans capabilities to enhance asset values through alternative uses. The purchase price represents over $240,000 per apartment site as the current forecast yield will be over 1600 apartments. DA’s are yet to be approved for the site. Greenland will take the drivers seat on this development with a 60% interest. SCentre & CBUS 9. SCentre & CBUS acquisition of 131 Elizabeth Street for $360M – This asset has been the flagship store for David Jones and following their announcement to consolidate in to their Market Street store, this asset became available with Scentre being the likely buying given the long term marriage quality to the Westfield assets it adjoins. The CBUS participation naturally points to a split of interests down the track the a likely tower development. The complexities of a heritage facade and Hyde Park shadow plans will constraint the capacity to develop a large tower on the site. Dahua Australia 10. Dauhua Australia acquisition of land parcel at Aviation Rd Point Cook for $360M – This transaction (from 3 private landowners) has set a new benchmark for vacant land transactions in Victoria. The 185 hectare site will likely yield 3,100 lots equating to a purchase price of $124,000 per lot or $2.0M per hectare. Dahua also has approximately 500 hectares of land in Menangle Park, Sydney and another 63 hectares in Melbourne West. More Information Details of all of these sales are available free of charge at the Australian Property Transaction Data Map. See transaction volumes, sale prices, reported yield and much more. Filter the data to any sector, state of period of time to gain your own understanding of the market.
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