Singapore-based CapitaLand is shying away from inner-city office buildings in favour of suburban areas it looks to boost its $132 billion-plus property portfolio.
Sydney’s Macquarie Park is the latest area to be targeted by the group with its Ascendas REIT acquiring three suburban office buildings for $288.9 million from AMP Capital at 1-5 Thomas Holt Drive.
The proposed acquisition follows on from the nearby $167.2 million purchase of the in-development MQX4 building from Frasers Property Industrial and Winten Property Group in September.
The two acquisitions are expected to benefit from the Sydney Metro City Line to open in 2024 as well as a possible change in office appetite post-pandemic.
Ascendas Funds Management chief executive William Tay said this is their fifth suburban office property investment in Australia with Sydney accounting for 48 per cent of their national portfolio.
“We are continuing to expand our suburban office portfolio in Australia as affordable satellite hubs such as Macquarie Park remain attractive for companies seeking to decentralise from the central business district,” Tay said.
The 1-5 THD buildings are 100 per cent occupied by companies including Metcash and Foxtel with rent to increase from 3.25 to 3.75 per cent annually.
The modern “campus style property” includes three office blocks with a 39,188sq m net lettable area on freehold land.
There are also 1,107 car parking spaces, a pool, barbecue areas, a café and two tennis courts on the site.
The weighted average lease expiry of the buildings is 4.5 years pushing the Ascendas’ portfolio WALE from 4.3 to 4.4 years.
The proposed acquisition will be funded by Ascendas Reit with proceeds from equity fund raising, debt facilities and internal resources.
However it is still subject to the approval of the Australian Foreign Investment Review Board which is expected to be given early 2021.
The Macquarie Park region has proved popular for investors and developers through 2020.
At the start of the year Frasers and Winten gained approval for a $750 million business district including the MQX4 building.
Stockland is also looking to develop a four-hectare site next to its M_Park commercial office project.
Another Singaporean asset manager Keppel Capital has also staked a claim in the area with the $306 million purchase of Pinnacle Office Park.