GIC buys 25% stake in US$2.9bn Sydney office fund

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Singaporean sovereign wealth fund GIC is buying a 25.1% interest in the A$4.3bn (US$2.9bn) trust that owns the landmark Barangaroo office precinct in Sydney’s CBD.

GIC, which has more than US$100bn in assets under management, bought the Lendlease International Towers Sydney Trust interest from Australian property group Lendlease and Canada Pension Plan Investment Board (CPPIB), according to a statement.

Barangaroo Office Precinct (image: GIC/LinkedIn)

The trust owns three office buildings and a carpark at Barangaroo South, an urban regeneration project on the last major waterfront site in the Sydney CBD.

The assets include an 89,200 sq.m. premium grade office tower, an 82,000 sq.m. premium grade office tower, and the 7,500 sq.m. International House Sydney building — Australia’s first engineered timber office.

“These high-quality assets, situated in the heart of Sydney’s CBD, are expected to generate attractive risk-adjusted returns in the long run,” said GIC Real Estate CIO Lee Kok Sun.

“As a long-term investor, we will continue to seek good investment opportunities that will add value to our global portfolio.”

The transaction is expected to close in Q3 2019.

The deal comes after GIC offloaded a half-stake in its A$1.8bn (US$1.2bn) Chifley Tower skyscraper in the Sydney CBD to Australian property group Charter Hall earlier this month.

Investors have been snapping up offices in the Sydney CBD and fringe markets to take advantage of the serious shortage of available space in the city, as well as major transport infrastructure works underway and the relatively positive economic outlook.

The market has attracted significant capital from abroad, including Blackstone’s A$1.52bn acquisition of the Scentre Sydney CBD office towers in June and the A$297m Sydney office acquisition inked by Singapore-listed Suntec REIT around the same time.