Japan’s NTT snares Canberra’s 121 Marcus Clarke St

Japan’s NTT has swooped on a major Canberra complex in the largest deal this year in the city’s office market.

NTT has snapped up a half stake in 121 Marcus Clarke Street, Canberra. Picture: Supplied.

Japan’s NTT Urban Development has swooped on a major Canberra complex, picking up a half stake in a $206 million building on Marcus Clarke Street in the largest deal this year in the capital city’s office market.

The group snapped up a half stake in 121 Marcus Clarke Street from MTAA Super for close to $103m, with the buy taking the latest wave of Japanese investment in commercial property to about $2 billion.

NTT’s arrival in Australia heralds further interest from Japan’s major companies in local property. Its parent, Nippon Telegraph and Telephone Corporation, is the fourth-largest telecommunications company in the world in terms of revenue.

The company is also the third-largest publicly traded company in Japan after Toyota and MUFG.

NTT targeted Canberra because of its concentration of federal offices and major law firms, predicting steady demand for such offices from large tenants. It was also drawn to the property as it is one of the few prime-grade buildings in the area that has a wide range of tenants, including a federal government agency.

The building, in Canberra’s CBD, also has access to public transport and is near the first station on the city’s light rail, expected to be completed this year, as well as the bus terminal. The complex is adjacent to the Australian National University and was developed in 2010 by Alba Capital Partners and the ­university.

Realmont Property Partners advised NTT on its move into Canberra as part of its business of introducing offshore capital to Australia.

The funds manager has been active in Canberra and also advised Soilbuild Business Space REIT on its purchase of 14 Mort Street and helped the Uniting Church of Australia in securing the Woden Centre in Bradley Street. Realmont has also advised clients on plays in Sydney, Adelaide, Melbourne and Brisbane.

The Canberra building spans 25,692sq m and has 12 floors above ground and four below ground.

The deal, which showed a yield of about 6 per cent, was brokered by JLL’s Tim Mutton, who declined to comment.

The pricing puts on display Canberra’s attractive yield spread against the much tighter Sydney and Melbourne markets.

The Japanese group could also work to reset rents after the federal ­election.

Existing tenants include Meyer Vandenberg, JLL, EY, Comcare, Mills Oakley and SHAPE.

NTT is understood to have ­assessed the Australian office market for a long period before snaring the stake in an off-market play. Selling the half share also freed up some capacity for MTAA Super, which has been making other property plays.

NTT, which also has a stake in a Melbourne residential development, is only one of the Japanese groups looking to get set in Australia. Japanese investors poured more than $1.6bn into local commercial real estate last year, with a new cohort of companies chasing Australia for its higher growth.

In major plays, Tokyo-listed Daibiru picked up the under-construction 275 George Street, Sydney, for close to $240m. In 2016, Japan’s Mitsubishi and Chinese group Ping An Insurance took an 80 per cent stake in Lendlease’s planned $1.5bn Circular Quay Tower in Sydney.

Other big moves include Daisho’s purchase of the W Hotel, Melbourne, for $219m and PA Realty, a venture between Mitsubishi Estate Co and CLSA Real Estate, buying three towers in Melbourne and Sydney. JLL said Japanese outbound investment had grown steadily over recent years, focusing on core ­office assets, hotels and large-scale developments.