Australian REIT Abacus buys North Sydney office for US$211m

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Australian REIT Abacus Property Group has snapped up a North Sydney office from Oxford Properties for A$311.3m (US$211.4m) after the buyer’s joint takeover bid of an Australian office portfolio collapsed last week.

The 99 Walker Street property is a 21-storey grade A asset with more than 19,295 sq.m. of net lettable space, reflecting $16,100 per square metre excluding transaction costs, Abacus said in a statement.

It is the latest deal in the fast-growing North Sydney office market, as investors tap into the major infrastructure investments happening in the area.

“This transaction aligns with our strategic priority of acquiring assets in specific locations where we see amenity and infrastructure improvements that we believe will translate to strong tenant demand,” said Abacus managing director Steven Sewell.

Australian Unity fund deal falls through

The office deal comes after Abacus and Charter Hall Group ended its takeover bid to buy the Australian Unity Office fund (AOF) for A$495m last week.

The buyers launched the takeover offer in June this year after buying a 19.9% stake in the fund for A$95.6m, reflecting A$2.95 per share.

AOF owns a portfolio of nine offices across metropolitan and CBD markets in Sydney, Adelaide, Melbourne, Brisbane and Canberra, worth a combined $635.6m, as of June 2018.

In September, the joint venture formalised its offer at A$3.04 per stock, however the deal fell through when the buyers couldn’t get enough shareholders on board.

“It is disappointing that, despite over 60% of eligible votes cast being in favour of the resolutions, the Scheme will not proceed and AOF unitholders have lost the opportunity to
receive $3.04 per unit cash consideration,” said Abacus’ Sewell and Charter Hall managing director and group CEO David Harrison.

North Sydney on the rise

Investors have flocked to the North Sydney office market this year to take advantage of the major railway infrastructure works underway.

The newly acquired office is property is located between the North Sydney Station and Victoria Cross Station, which is scheduled for completion by 2024.

Just last week, US-headquartered CBRE Global Investors bought the 21,012 sq.m. office development at 118 Mount Street office development from Zurich Insurance Group on behalf of a German real estate Spezialfonds.

Hong Kong-based Early Light International acquired a half-stake in the Northpoint Tower from Cromwell Property for A$300m in July, while a Starwood Capital-led JV bought the Zenith office complex from Blackrock and Centuria for A$438.2m in June this year.

Listed on the Australian stock exchange, Abacus had over A$2.3bn in assets under management and a market cap of A$2.4bn, as of end-June 2019.