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Hong Kong’s Link REIT buys big stake in Australian office portfolio for $2.3bn from Canada’s Oxford Properties Group

The mega deal shows that investors are betting that city economies will come back following the pandemic.

Link REIT’s office portfolio deal shows that investors are betting that city economies will come back.​
Link REIT’s office portfolio deal shows that investors are betting that city economies will come back.​

Giant Hong Kong company Link REIT is betting on a return to Australia’s top office skyscrapers and has unveiled a $2.3bn deal to take an interest in a collection of the country’s top buildings being sold by Canada’s Oxford Properties Group.

The deal, flagged by the Australian last December, is among the largest to be struck in the wake of the coronavirus crisis and shows that global investors believe that top buildings in Australian cities will be among the fastest to come out of the global pandemic.

Link has been at the vanguard of city investing and last year also snapped up stakes in three Sydney malls, including the Queen Victoria Building, positioning it to benefit as cities rise in the wake of the pandemic.

The group has agreed to enter into a joint venture with Oxford in the Investa Gateway Office venture, which consists of a prime office portfolio in Australia worth more than $2.3bn. Link will own a 49.9 per cent interest while Oxford will own a 50.1 per cent interest.

The headline price for Link’s cut of the portfolio was $1.13bn, making it the largest office deal in the wake of the pandemic.

It was brokered by real estate agency CBRE’s Stuart McCann, Flint Davidson and Greg Hyland.

Link will sit alongside Oxford as a keystone investor in the venture which owns five of the country‘s top skyscrapers, with the buildings including 126 Phillip Street, 388 George Street, 151 Clarence Street and 347 Kent Street all in Sydney and 567 Collins Street, Melbourne.

The venture will continue to be managed by Investa and locks in its status as one of the country‘s top office funds managers. Link chief executive George Hongchoy said the venture was “one of the highest quality Australian office real estate portfolios to be offered to the market in recent years”.

“The Australian economy has been highly resilient and the investment in one of its highest quality prime office portfolios provides immediate scale, positions us strongly for the next cycle,” he said.

Oxford’s head of Australia, Alec Harper, said that the firm had used Investa’s Australian office management expertise to create significant value. The deal follows Japan’s Mitsubishi Estate investing into Sydney’s Parkline Place project.

Mr Harper said the deal “further demonstrates the continued global institutional demand for prime and highly sustainable office product” and the firm will use the capital to expand locally.

“Oxford will redeploy capital from the transaction into our prime office develop-to-core pipeline and build-to-rent develop-to-core investment strategy in Australia, where we continue to have a favourable long-term outlook,” he said,

Investa chief investment officer Penny Ransom said Link and Oxford’s global investment track record and Investa’s leading investment and asset management expertise, “will underpin the future performance of the venture”.

In November, Link swooped on a stake in three Sydney CBD shopping malls in a $538.2m purchase. The Hong Kong investor acquired a 50 per cent stake in the Queen Victoria Building, The Strand Arcade and The Galeries.

The Hong Kong giant was aided locally by EG Funds, which were appointed by Link last March to support their Australian portfolio expansion. It also advised on the acquisition of the Sydney CBD retail assets.

EG head of capital transactions, Sean Fleming, believes securing exposure to the very top end of Australia’s office markets was a timely strategic move for Link.

“EG has identified these towers as breakaway investment opportunities, resilient to the pressures of Covid because they meet tenant demand for high-quality, hybrid and healthy work environments,“ he said.

Ben Wilmot
Ben WilmotCommercial Property Editor

Ben Wilmot has been The Australian's commercial property editor since 2013. He was previously a property journalist with the Australian Financial Review.

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Original URL: https://www.theaustralian.com.au/business/property/hong-kongs-link-reit-buys-big-stake-in-australian-office-portfolio-for-23bn-from-canadas-oxford-properties-group/news-story/a277465261181508ba6472b8fe4e1432