Link REIT expands into Australia with US$470m office deal

Hong Kong-listed Link REIT has agreed to buy a 10-storey office tower in Sydney from funds managed by Blackstone for about A$683m (US$470.4m), marking its first acquisition outside of Greater China.

100 Market St, Sydney (source: Link REIT)

The grade A office asset at 100 Market St has 28,385 sq.m. of total net leasable space and is fully occupied by three blue chip tenants, the firm said.

The transaction is the REIT’s first deal outside of Hong Kong and mainland China, as it looks to increase its exposure to more stable markets including Australia, Singapore, Japan and the UK.

“A more diversified portfolio with overseas properties providing new sources of income will help ease our reliance on Hong Kong properties to generate income progression, and contribute to a healthier growth trajectory,” said George Hongchoy, CEO of Link REIT’s manager.

“The acquisition will drive growth in sustainable income and capital value, with limited downside risk.”

Located within a mixed-use development in the midtown precinct, the property was substantially redeveloped during 2010 and 2011, as part of the larger Westfield Sydney redevelopment.

It is let to a sovereign wealth fund, a government body and an ASX-listed property investor, with a weighted average lease expiry of 8.45 years.

Link expects overseas assets to account for no more than 10% of its portfolio, with the Sydney asset accounting for just 1.66% of the REIT’s total assets.

Link said there were no immediate plans to divest existing assets, and expects its portfolio will comprise of 70% to 75% of assets in Hong Kong and no more than 20% of assets in mainland China.

The deal comes after Link acquired the Centralwalk shopping centre in the heart of Shenzhen’s CBD for US$982m in February, as well as Beijing’s Jingtong Roosevelt Plaza for US$375m in November last year.

Link REIT is the largest real estate investment trust in Asia by market cap.

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