Five of the biggest real estate deals of 2019

Transaction numbers might have been down in 2019 but the size of real estate deals just kept getting bigger.

With institutional investors on the hunt for strong yields (relative to what bonds had to offer) and interest rates at record lows, there was strong competition for the limited assets on the market.

Here are five of the biggest commercial real estate deals of 2019.

Chifley Tower, Sydney

It was a big 2019 for powerhouse property funds manager Charter Hall, which had a record year in terms of equity raising and fund growth, thanks in part to its acquisition of a half stake in Sydney’s Chifley Tower, worth $900 million.

A Sydney landmark: The Chifley Tower deal was sealed in August.

The off-market deal, struck on a yield of below 4.5 per cent, was sealed in August when two of the group’s wholesale funds partnered with Singapore Sovereign wealth fund GIC to buy the leasehold of Chifley Tower 2. Charter Hall’s earlier acquisition of the freehold site in 2018 in a $98.5 million deal paved the way for this transaction. GIC has retained the remaining half stake.

Westfield Marion, Adelaide

This was the deal of the year that had everyone in the industry glued to their seats. Given that a confidence hit to the retail sector had sent valuations of some shopping centres southwards, the biggest sale of the year was bound to attract attention.

Lendlease first put its half stake in Adelaide shopping mall Westfield Marion, the 11th largest shopping centre in the country, on the market in April and sold it seven months later for $670 million, well below the $737.5 million valuation of Scentre Group’s half share, translating to a 9 per cent discount to book value.

 

Westfield Marion

The buyer was a fund held by Singapore Press Holdings, whose property business is growing as revenue from its core business of publishing newspapers and magazines declines.

Those involved in the deal said it underscored how offshore investors remained attracted to “fortress style” retail assets but analysts said it showed buyers for such large malls were spread thin. They predicted retail property values would decline over 2020.

80 Collins Street, Melbourne

Investors, institutional and retail, couldn’t get enough of A-grade commercial property and in 2019 fund managers and real estate investment trusts made the most of it.

An artist’s impression of 80 Collins Street, Melbourne. Supplied

It was a year of capital raising, the biggest of which was undertaken by the country’s largest office landlord, Dexus, in a $900 million placement to back its acquisition of a new development at 80 Collins Street in the Melbourne CBD. It was the biggest single capital raising in the sector since the global financial crisis.

The sale set Dexus back $1.476 billion after Queensland funds giant QIC offloaded the mixed-use precinct and boosted the REIT’s portfolio weighting to the Melbourne CBD office market from 9 per cent to 17 per cent.

400 George Street, Brisbane

400 George Street, Brisbane. Attila Csaszar

Brisbane experienced an unprecedented run of big ticket sales in 2019. The Queensland capital’s improving office market soaked up an overflow of investor demand from Sydney and Melbourne, while offering relatively better value. The number of office properties to sell above $5 million in 2019 was the lowest since 2012 but the total value, $3.6 billion, hit a record high, according to CBRE.

Topping the list of deals in Brisbane was the sale of a 35-level building at 400 George Street by US property giant Blackstone and German group HSBC Trinkaus to ASX-listed Cromwell Property Group for $524.75 million.

Telstra exchange portfolio

This was a big real estate play from a non-real estate player.

Telecommunications giant Telstra unlocked $700 million of equity in August with the sale of a 49 per cent stake in a new property trust that comprises a portfolio of 37 of the company’s higher value exchange properties.

The sale and leaseback deal was yet another huge acquisition for listed fund manager Charter Hall, which bought the stake in a partnership with Charter Hall Long Wale REIT and a local super fund.

 

Ingrid Fuary-Wagner

The Australian Financial Review

https://www.afr.com/property/commercial/five-of-the-biggest-real-estate-deals-of-2019-20191209-p53i66

9th January 2020

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