Trophy office and retail assets to test buyer’s appetite

Investors are testing the market’s appetite for trophy assets, with fund manager ISPT offering up a portfolio of retail and office properties worth about $600 million across Sydney and Melbourne.

The most well-known is the historic Melbourne GPO, which is the long-term home of fast fashion house H&M, while in Sydney, it is selling the Eastgate shopping centre in Bondi Junction and a vacant office block at 270 Pitt Street.

ISPT is selling the Melbourne GPO.

In total, there are five assets which are owned by the ISPT Core Fund and are being sold as part of a strategic review and also include the Strand Melbourne and the Halls Head Central Mall in Western Australia.

The proceeds generated from the sales will be mostly reinvested into the fund’s existing development pipeline with a focus on the higher-performing industrial and health & life sciences sectors.

Matthew Brown, head of funds management, ISPT, said the real estate landscape is rapidly evolving, and by “divesting tactical assets and re-calibrating our existing sector exposures to create a diversified portfolio we can optimise returns for our investors”.

The $17.7 billion Core Fund is invested in over 80 property assets across various sectors, including retail, office, industrial, education, health and life sciences, and is Australia’s largest wholesale property fund.

ISPT has appointed CBRE’s James Parry, Flint Davidson and Michael Andrew together with Knight Frank’s Ben Schubert, Paul Roberts and Jonathan Vaughan to sell the Pitt Street office tower.

Parry said there has only been three office towers traded in Sydney’s midtown precinct in the past five years, so “significant investor interest in 270 Pitt Street is anticipated”.

One of the latest deals is the completion of the sale of the office tower and retail asset at 60 Margaret Street and the MetCentre in Sydney by Mirvac and Blackstone for a combined $777 million to Morgan and MEC Global Partners Asia and is in line with reported June 2023 book value.

Mirvac also exchanged contracts with a purchaser for the sale of 367 Collins Street, Melbourne with the contract conditional on capital.

Mirvac’s chief executive Campbell Hanan, said the sale of 60 Margaret Street and MetCentre forms part of the group’s strategic asset sales program, “helping to further strengthen our balance sheet and improve cash flow resilience of our investment portfolio in a challenging operating environment”.

ISPT is selling the office tower at 270 Pitt Street, Sydney

The Mirvac/Blackstone sale was handled by Cushman & Wakefield’s Josh Cullen, Mark Hansen and Bridhe Woods, and JLL’s Luke Billiau, Simon Storry, James Barber and Sam Hatcher.

ISPT’s retail assets, the Melbourne GPO and The Strand are being sold through Simon Rooney and James Douglas from CBRE, and Lachlan MacGillivray from Colliers, with a combined value of about $180 million. Fashion house H&M has a lease to 2034 at the GPO.

In Sydney, JLL’s Nick Willis and Sam Hatcher, alongside Stonebridge’s Carl Molony, Philip Gartland and Justin Dowers the shopping centre at Eastgate Bondi Junction.

The agents said the centre supports strong trading fundamentals with the specialty tenants producing over $14,800 per square metre in sales, about 76 per cent above the industry benchmark.