Link REIT Partners with Oxford in AUD2.3 billion Investa Gateway Office Venture

Link Asset Management Limited, the manager of Link Real Estate Investment Trust has agreed to enter into a joint venture with Oxford Properties Group in the Investa Gateway Office (IGO) venture, which consists of a prime office portfolio in Australia worth over AUD2.3 billion. Link will own a 49.9% interest while Oxford will own a 50.1% interest.

Link will sit alongside Oxford as a keystone investor in IGO. Located in core locations of the global gateway cities of Sydney and Melbourne, IGO comprises five income-producing, prime grade office assets with focus in sustainability – 126 Phillip Street, 388 George Street, 151 Clarence Street and 347 Kent Street all in Sydney and 567 Collins Street, Melbourne. IGO has been and will continue to be managed by Investa, a proven, end-to-end real estate investment manager and office sector specialist in Australia.

George Hongchoy, Link’s Chief Executive Officer, said “IGO is one of the highest quality Australian office real estate portfolios to be offered to the market in recent years. We are delighted to partner with two firms that have deep conviction and connections in the Australian market and further strengthen Link’s presence in the country. The Australian economy has been highly resilient and the investment in one of its highest quality prime office portfolios provides immediate scale, positions us strongly for the next cycle and aligns with our Vision 2025 growth strategy of diversifying and improving our portfolio mix in the region.

”The purchase price of the 49.9% interest in the joint venture is AUD596 million (approximately HK$3.3 billion). Link will fund the investment through its internal cash resources and debt facilities.

Alec Harper, Oxford’s Head of Australia, said “Leveraging Investa’s Australian office management expertise, we have created significant value and achieved a high performing de-risked portfolio. Following on from the recent investment by Mitsubishi Estate into our Parkline Place project, today’s transaction further demonstrates the continued global institutional demand for prime and highly sustainable office product. The deal demonstrates Oxford’s and Investa’s ability to attract partner capital and crystallises the value created by each of our teams. We look forward to partnering with Link on this venture.”

“Oxford will redeploy capital from the transaction into our prime office develop-to-core pipeline and build-to-rent develop-to-core investment strategy in Australia, where we continue to have a favourable long-term outlook.”

Penny Ransom, Investa’s Chief Investment Officer, said “We are excited to welcome Link as a significant, new investment partner to our platform. To attract a partner of Link’s calibre reflects the quality of the IGO portfolio and the strong synergies that exist between our businesses. Link and Oxford’s global investment track record, together with Investa’s leading investment and asset management expertise, will underpin the future performance of the venture.” 

Oxford is a leading global real estate investor, asset manager and business builder, while Investa is Oxford’s local operating and development partner across its commercial office portfolio and growing build-to-rent residential business in Australia. Through active asset management, the portfolio has been successfully de-risked by Investa and Oxford and provides diversified income, backed by high calibre tenants from a range of industries, with strong lease covenants and market leading environmental credentials. 

Further details on the properties are detailed below. The transaction is expected to complete in the first half of 2022.

(1)     151 Clarence Street, Sydney

This property, also known as Barrack Place, is an A grade office completed in 2018. The property comprises 16 levels of office space, a mezzanine floor, a ground floor and a lower ground retail, as well as 41 parking spaces over 4 basement levels with total net lettable area of 21,891 sq.m. This property has a 5.5-star NABERS Energy rating and a 4.5-star NABERS Water rating. As at 31 December 2021, the primary tenants of this property include, among others, Arup and Mills Oakley.

AOFI I Trust Group holds a 100% interest in 151 Clarence Street.

(2)     126 Phillip Street, Sydney

This property, also known as Deutsche Bank Place, is a premium grade office completed in 2005. The property comprises 31 levels of office space, a ground floor retail, a four-storey commercial-use pavilion, and 84 parking spaces over 1 basement level with total net lettable area of 42,131 sq.m.. This property has a 5-star NABERS Energy rating and a 4.5-star NABERS Water rating. As at 31 December 2021, the primary tenants of this property included, among others, Deutsche Bank and Allens.

AOFI I Trust Group holds a 25% interest in 126 Phillip Street. The remaining interest is held by an Investa-managed fund and a sovereign wealth fund.

(3)     388 George Street, Sydney

This property is an A grade office completed in 1976, with major refurbishments including the addition of a 5-storey mixed-use pavilion building completed in 2020. The main office tower of this property comprises 28 levels of office space, a mezzanine floor, a ground floor and a lower ground retail, and 73 basement parking spaces over 2 basement levels. The total net lettable area of the main office tower and the pavilion building is 41,255 sq.m. This property is targeting a 5-star NABERS Energy rating and a 4-star NABERS Water rating. As at 31 December 2021, the primary tenants of this property included, among others, QBE and Aware Super.

AOFI I Trust Group holds a 50% interest in 388 George Street. The remaining interest is held by an alternative investment management company.

(4)     347 Kent Street, Sydney

This property is an A grade office completed in 1992 and with a major refurbishment having been completed in 2020. The property comprises 20 upper levels of office space, a ground floor and a lower ground floor retail, as well as 74 parking spaces over 3 basement levels with total net lettable area of 26,819 sq.m.. This property has a 5-star NABERS Energy rating and a 4.5-star NABERS Water rating. As at 31 December 2021, the primary tenants of this property included, among others, IOOF and Zurich.

Following completion of the Reorganisation, AOFI I Trust Group will hold 100% interest in 347 Kent Street.

(5)     567 Collins Street, Melbourne

This property is a premium grade office completed in 2015. The property comprises 23 upper levels of office space, a ground floor retail, gymnasiums on 2 levels, and 156 parking spaces over 3 basement levels with total net lettable area of 55,052 sq.m.. This property has a 5.5-star NABERS Energy rating and a 5.5-star NABERS Water rating. As at 31 December 2021, the primary tenants of this property include, among others, Jemena and Corrs Chambers Westgarth.

AOFI I Trust Group holds a 50% interest in 567 Collins Street. The remaining interest is held by an Investa-managed fund.