AMP Capital’s has traded an asset in Macquarie Park for $71m to ESR as it continues a program of selective asset sales.
The 1.5ha property at 44-50 Waterloo Rd Macquarie Park, is held by AMP Capital’s Diversified Property Fund which has a significant que of redemptions and is the subject of a merger proposal with Dexus’ Wholesale Property Fund.
The 7,156sqm site currently contains two low rise office and warehouse building leased to Macquarie University’s School of Engineering but it is destined to be developed. The site is zoned B3 Commercial Core and has a basic FSR of 2:1 and a height limit of 37m on the Waterloo Rd frontage and a 30m height limit on the Giffnock Ave frontage.
ESR is considering either a staged redevelopment of the site into A-grade office buildings, or an adaptation of the site for data centre use. ESR’s acquisition represents $4,733/sqm of site area.
Phil Pearce, CEO of ESR Australia, said, “This landbank investment offers exponential opportunity as it provides
holding income to allow a staged redevelopment. The area is well placed to capitalise on the changing office
landscape with an increase in demand for decentralised office space since the COVID-19 pandemic.”
Mr Pearce added, “We see business park assets as complementary to our core strategy of logistics and industrial
property. We’ve strong capability in the development and management of business park space and are pleased
to add this strategic asset to our portfolio.”
Frasers & Wintens are mid way through executing a similar strategy across the road on land surrounding the Macquarie Park Metro Station. That JV recently sold a 3,300sqm site to Ascendas REIT on a land acquisition and fund through deal which equated to $5,320/sqm for the site alone. Frasers & Wintens will develop a nine-storey building on the site, named MQX4, which will comprise 17,753 sqm of lettable office, 1,631 sqm of ground floor retail space and 204 car spaces.
This latest sale in Macquarie Park follows AMP Capital’s divestment of 1 Thomas Holt Drive Macquarie Park in December last year for $288.9M. That asset was also acquired by Ascendas REIT on a cap rate of 5.9%.
AMP Capital are also currently selling 140 St George’s Terrace, Perth which is expected to generate in excess of $180m in proceeds to the group, however AMP Capital are in no hurry to fire sell assets to meet redemption requests and are batting back any off market approaches to pick assets from their portfolio, instead opting for an orderly sale of non core assets.
Our Views
This is a site which AMP Capital should ultimately have held and redeveloped into a new core asset, however the time frame was unlikely to have suited the funds investors who are seeking a return of funds.
Macquarie Park has an abundance of similar opportunities all competing for similar tenants with little differentiation. The sites’ proximity to the metro station and main roads will one day appeal to tenants, though ESR will need to be patient. The concept of using the site as a data centre is a more likely possibility.
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