Aware Super’s $200m Brisbane tower deal to revive bruised market
The $180 billion Aware Super is preparing to buy a 27-storey office tower on Brisbane’s Ann Street, in the first major acquisition of an existing CBD tower in that market by a super fund in almost five years.
The mooted deal is worth about $200 million and will send a strong signal that institutional investors are ready to return to an office market that has been battered by two years of falling valuations.
On the sell side is ASX-listed Dexus, one of the country’s largest office landlords, and its co-investor Canada Pension Plan Investment Board. Aware Super is in advanced talks to purchase the A-grade building at 145 Ann Street, near the historic King George Square.
The last time a superannuation fund acquired an existing Brisbane office was in December 2019 when Prime Super acquired 313 Adelaide Street. Cbus Property took full control of the 205 North Quay development in 2022, but that project was not operational at the time of purchase.
As Aware prepares to finalise a deal for the Brisbane tower, the super fund has stepped up its ambitions to invest in London office blocks, this month striking a £1 billion ($1.95 billion) partnership with British property manager Delancey Real Estate. The platform will initially focus on central London office towers.
If completed as expected, the Brisbane deal will mark the return of local institutional capital to pure office investment. All but one of this year’s buyers of an office who did not intend to transform it into something else have been foreign investors or local private investor groups. The one other transaction involved Cbus Property – the property arm of super fund Cbus – acquiring a half stake in a Sydney office tower it already partially owned.
A sale price of about $200 million for 145 Ann Street would represent a near-8 per cent drop from its June book value of $217.6 million, and a 24.6 per cent drop from its peak value of $265 million. The tower is held in a fund owned in equal parts by Dexus and CPPIB.
Across the national office market, the country’s largest office property funds have lost almost 27 per cent in value since the start of the downturn, according to research and data provider MSCI.
Sale to fund investments
For Dexus, the mooted $200 million deal will progress plans outlined at last week’s annual shareholder meeting to divest $2 billion worth of assets – primarily offices – over the next three years. Other Dexus assets in sale discussions include Brisbane’s AM-60 building and its half stake in Sydney’s 309-321 Kent Street, sources said.
Although chief executive Ross Du Vernet declined to comment directly on the 145 Ann Street deal, he noted the divestment plan would provide capital for Dexus to improve the quality of its office exposure, such as the development of Sydney’s Atlassian Central and Waterfront Brisbane. It would also boost the property giant’s long-term strategy to become a bigger player in infrastructure, industrial and alternative property.
“What Dexus has done over a number of years, and will continue to do, is divest assets to fund investment in our committed development pipeline which includes high-quality office properties in Sydney and Brisbane,” Mr Du Vernet told The Australian Financial Review.
“Beyond that, Dexus’ incremental capital is likely to be deployed alongside capital partners with a current preference for industrial, infrastructure and alternatives.”
Overall, the office market remains relatively subdued. There was just $2.2 billion in deals for the three months to September, compared to $3.8 billion in retail transactions and $3.5 billion industrial transactions.
Nevertheless, the September quarter volume of office deals represents a significant increase from $1.4 billion traded over the same period a year ago, according to Cushman and Wakefield data.
Since September, big office deals include Canadian property giant Brookfield selling its half stake in Sydney’s 388 George Street for $460 million and US investment giant BGO acquiring 10-20 Bond Street for about $580 million from Mirvac and Morgan Stanley Real Estate Investing.
Cushman and Wakefield research head Dominic Brown said the rise in transactions indicated the office pricing cycle was nearing the bottom. Increased deal volumes were expected next year, he said.
“Greater clarity of the interest rate environment, with anticipated cuts next year, has seen the investment market take significant steps toward recovery,” Dr Brown said.
An Aware Super spokeswoman declined to comment on the Brisbane deal, but said the super fund “continually scouts for the strongest opportunities in the Australian office, industrial and living sectors”.
JLL, which is managing the sale campaign of 145 Ann Street, also declined to comment.
