Investors in AMP Capital’s managed office fund have been given a $575 million windfall in the biggest office sale of the year of its stake in the EY Centre at 200 George Street, Sydney.
Mirvac owns the other half and confirmed that it had utilised its pre-emptive rights to buy the interest with an aligned capital partner, M&G Real Estate. The stake was sold at a price said to be as much as 12 per cent over book value.
The landmark 33-storey office tower near Circular Quay waws completed in 2016. Its distinctive gold window shutters and million-dollar views of Sydney Harbour are home to EY and the diversified property giant Mirvac.
The sale by AMP Capital was in line with the fund’s strategy and the proceeds will be recycled into near-term capital commitments.
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AMP Capital Wholesale Office fund manager Kit Georgeos said, at a significant premium to book value, “the sale of 200 George Street is a fabulous result for the fund and its investors and demonstrates the continued strong appetite for prime CBD office assets”.
It comes as AMP Capital is looking to demerge its real estate business from AMP and amid rumours the management of the $7 billion AMP Wholesale Office Fund (AWOF) is being looked at by a number of interested parties.
Mirvac chief investment officer Brett Draffen said this transaction demonstrates the confidence in Sydney’s CBD office market and the ongoing demand for high quality, modern, well located assets.
“It is also another example of Mirvac’s ability to create opportunities for our aligned capital partners and validates the strength of our existing relationships,” Mr Draffin said.
The sale comes amid a swathe of deals that have been completed during the global pandemic, indicating that demand is still high for bricks and mortar properties. Cushman and Wakefield and Savills Australia.
Cushman & Wakefield’s latest quarterly Investment MarketBeat shows investment of $38.8 billion over the 12 months to June. While industrial property attracted a large amount of cash, office assets were also in high demand.
It says despite relatively soft volume in 2020, the extraordinary activity in the second quarter of 2021 lifted rolling annual transaction volumes lifted from the first quarter’s $27.3 billion, though it did not reach the record set in the third quarter of 2019 at $46.1 billion.
The increase in activity can be attributed to a number of factors including heavy demand for industrial property; strong business and consumer sentiment; Australia’s relative success in containing the pandemic; and ultra low interest rates.
National director of research at Cushman and Wakefield Tony Crabb said investment volume in Australian commercial real estate continues to rebuild following the COVID-induced weakness of 2020.
“Despite total office volume not equalling industrial volume, office transaction numbers rose from the previous quarter,” Mr Crabb said. “There were 47 transactions completed in the second quarter of 2021, up from 40 in the same time last year.”
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