Sydney’s home of ASX sells for $250m as office vibe picks up
A Sydney financial landmark, the long-occupied home of the ASX, has changed hands for around $250 million, in a sign that investor confidence in the battered office market is reviving.
US investment giant PGIM has teamed up with local platform Anton Real Estate Partners to acquire 20 Bridge Street from Hong Kong-based Early Light International Group, backed by billionaire toy maker Francis Choi.
It is a bargain deal for the buyers given that Mr Choi, Early Light’s founder and chairman, bought the building in 2017 for $335 million. At the time, it was bought on a 4.5 per cent fully leased yield, setting a new benchmark for Sydney office property.
The building has sold this time around on around 7 per cent yield, a testament to just how far prices for top office blocks have fallen. High interest rates combined with uncertain demand as flexible work arrangements expanded have sent office values plunging in the past two years.
But there is a growing mood that the devaluation cycle may be close to the bottom. As well, the drumbeat of office mandates requiring more time in the workplace is rising, adding impetus to the market.
The deal represents a return to the office sector for both PGIM and Proprium, after both firms stood on the sidelines for some years, waiting out the correction.
“The office sector in Australia has been more resilient than most global office markets, but we see a similar trend in terms of the flight to quality,” said Steve Bulloch, head of Australia for PGIM Real Estate.
“We have been very thoughtful about choosing the right re-entry point to the office sector and believe the current timing is right.”
The two investment houses will hope to capitalise on potential leasing upside as the market recovers, with the ASX due to move to new lodgings on Martin Place.
With close to $340 billion under management, PGIM Real Estate is the property arm of PGIM, a global asset management business of New York-listed Prudential Financial.
Anton is a subsidiary of Proprium Capital Partners which was spun out of the Morgan Stanley Real Estate Special Situations team and now has close to $10 billion under management globally.
