Education sector sparks Sydney property deals
A Singaporean investment house has picked up a Sydney office tower, home to Central Queensland University, in a $111.58 million deal, the latest example of how the country’s higher education sector is fuelling real estate investment.
The buyer is Cambridge JMD Investment Management, a subsidiary of Singapore’s Cambridge RE Group, which will hold 400 Kent Street in an education real estate fund it has established.
The 11-storey block was bought from Terraform Capital, which managed the asset on behalf of a Hong Kong group. The deal represents another handy benchmark for the recovering commercial real estate market, which has been battered by high interest rates and weak demand for space, sending the values of some office towers significantly lower than their peak three years ago.
Terraform’s investors acquired the Kent Street building in 2018 from Credit Suisse Asset Management for $111.8 million on a yield of around 4.5 per cent. The latest deal was struck on a yield above 7 per cent.
But along with the return of workers to the CBD office towers, a strong tertiary education buoyed by international students – notwithstanding government efforts to cut foreign enrolments – underpins renewed confidence from investors that the cycle has bottomed for the office sector, at least in Sydney.
“The transaction of CQU’s Sydney Campus is further evidence of education anchored assets continuing to be more sought after and targeted by global asset managers backed by their experienced investors as evidenced by this deal to a specialist education fund,” said Richard Butler, of RB Capital Advisers, who brokered the Kent Street building along with Stanton Hillier Parker’s Steven Tsang.
The building’s 11 floors comprise more than 10,000 square metres of lecture rooms and study areas, in addition to the basement parking. There are over seven years to run on the lease, which includes fixed annual rental growth.
The tertiary education sector is also drawing investment into the accommodation sector elsewhere in Sydney, with the UNSW itself buying up a student accommodation facility in the city’s east.
Just 600 metres from UNSW’s Kensington campus, the property at 159-171 Anzac Parade and 1 Lorne Avenue has near 7,900 sq m of space and 233 student beds. The building was already fully leased to UNSW by the vendor, SC Capital Partners, a Singaporean private equity real estate firm.
The sale price has not been disclosed but was a significant premium to the purchase price and a 19 per cent premium to its book value, according to SC Capital.
That property was brokered by Cushman & Wakefield’s David Curtis, Louise Burke, and Raphael Sebban along with JLL’s James Barber, Luke Billiau, Jack Bergin, and Andrew Rojek.
