Australian office towers anchor AEP deal with HNA Group

Singapore’s AEP Investment Management and Chinese conglomerate HNA Group have confirmed plans to list a trust in Singapore.

Pirie Place, Adelaide

Singapore’s AEP Investment Management and acquisitive Chinese conglomerate HNA Group, which owns a stake in Virgin Australia, have confirmed plans to list a trust in Singapore that will own a portfolio that includes office towers in Australia.

The Australian last month revealed the pair’s plan to launch a $1 billion real estate investment trust anchored by office towers on the eastern seaboard and properties in Singapore.

HNA will take a stake of at least 35 per cent in the planned Asia-focused REIT as well as taking a 75 per cent interest in fund’s management company.

The move was confirmed in a filing to the Shenzhen stock exchange yesterday and is subject to shareholder and regulatory approvals.

The statement said the partners had deep experience in fund management and the plan was in line with HNA’s desire to learn more advanced investment management philosophies, pick up experience running foreign real estate investment funds and to help transform its business. HNA will fund the move itself, prompting speculation that it will tip its tower at 1 York Street in the Sydney central business district into the trust.

The Chinese group bought the tower for $117m from Colonial First State’s direct property investment fund in 2011 and the 22-storey block has since leapt in value.

AEP’s holdings include the unlisted Basil Property Trust, on which the fund manager last year tapped investment banks for advice on exit options. It owns a Singapore business park and a $161m Brisbane office tower.

The HNA venture would be the first Singapore-listed trust co-managed by a mainland Chinese player to make inroads into Australia.

AEP, which declined to comment, brings funds management and real estate skills to the pairing, and has ambitions of building a substantial local and Singapore portfolio, while HNA has financial clout and influence in the property, finance and tourism industries worldwide.

AEP has put together a portfolio of office buildings in Australia. The group last November agreed to buy the A-grade Pirie Place tower in Adelaide from fund manager CorVal for close to $110m and it could go into the float. In February last year, AEP sealed a deal to buy QIC’s 41 George Street office tower in Brisbane’s CBD for $161m. The 27-level office tower building, called Minerals House, may also be destined for the float.

In a separate play, HNA and an unidentified partner were yesterday reported to have acquired New York skyscraper, 245 Park Avenue, for $US2.21bn.

The purchase from Brookfield Property Partners and the New York State Teachers’ Retirement System would be one of the most expensive deals for a Manhattan tower.