QIC and Deutsche Make $200 Million Office Asset Swap


QIC Global Real Estate and Deutsche Asset Management have finalised a $200 million property swap of Sydney shopping centre Pittwater Place and an office tower located at 555 Lonsdale Street in Melbourne.

The deal was negotiated by Mark Hansen and Rick Butler of Inc Re and marks the return of swap transactions to the property market, driven by the sector-specific strategies developed by both parties.

Steven Leigh, QIC Global Real Estate managing director confirmed that QIC had finalised the addition to its property portfolio with the acquisition of Pittwater Place at Mona Vale in Sydney in an off-market transaction.

"Pittwater Place will be the latest retail centre to join the QIC Australian Core Plus Fund, playing an important role in the Fund's long-term strategy to invest in quality Australian real estate assets that are underpinned by strong core returns and reliable growth prospects," Leigh said.

Pittwater Place was purchased by Deutsche Bank’s real estate branch in 2012 from Brookfield Asset Management for $56.6 million.

Pittwater Place is dominating its growing catchment, in an area with favourable demographics, which includes a Coles supermarket, Harris Farm Markets, Priceline Pharmacy, Fitness First and over 30 speciality stores.

The centre has been added to the $600 million wholesale property fund that QIC won control of in October 2016 when its superannuation fund investors ejected LaSalle Investment Management.

Deutsche Asset Management has also boosted its property portfolio increasing its office exposure with the acquisition of the office tower at 555 Lonsdale Street.

The 16 level A-Grade office tower is located in Melbourne’ legal precinct and occupies 16,176 square metres with parking facilities for 76 vehicles. The building is currently leased to Monash University Law Facility, a barristers chambers and several other tenants.

Deutsche Asset Management has been expanding its office tower acquisition across Australia having also purchased an A-Grade tower on Edward Street in Brisbane from Axis Capital for $142.65 million in July.

The Asset Management group already own 151 Castlereagh Street located in Sydney’s CBD and the former F.A Pidgeon & Son tower at 313 Adelaide Street in Brisbane.

Deutsche Asset Management head of alternatives, Asia Pacific Victoria Sharpe said the swap was a rare occurrence.

“This is an excellent investment in Melbourne’s strengthening CBD office market and a great opportunity to diversify the global portfolio for our client," she said.

Rick Butler of Inc Re said that the deal was the first direct swap undertaken since a deal between Tower Holdings and Stockland for 9 Castlereagh Street and Northpoint in Northern Sydney in 2008 worth $450 million.

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