Proprium and PGIM pay around $250m for Sydney’s landmark 20 Bridge Street building

A first joint venture by Proprium and PGIM Real Estate aims to transform the landmark building at Exchange Square as Australia’s sharemarket operator moves out.

The ASX building at Exchange Square in Sydney.

Anton Real Estate Partners, the local unit of international real ­estate firm Proprium Capital Partners, has struck a joint venture with American giant PGIM Real Estate to purchase Sydney landmark 20 Bridge Street.

The pair have paid about $250m to Hong Kong-based Early Light International for the building, which houses the ASX, as the company controlled by billionaire Francis Choi sells out of Sydney’s financial core.

The deal is the first time the pair have teamed up but both have extensive experience in repositioning city buildings, with the deal’s pricing and yield in the mid-7 per cent range reflecting its value-add nature.

The sale by Mr Choi, who is the world’s largest toymaker, was flagged by The Australian and shows the repricing of office assets is reverberating across investment markets, though the pace of falls is slowing.

Early Light paid about $335m in 2017 to buy the building from Malaysian pension fund Kumpulan Wang Persaraan before putting it on the market last year.

The value fall was exacerbated by the ASX’s decision to shift to a new Martin Place headquarters but the new owners are planning a major repositioning and the space will come back online just as ­demand is picking up.

Knight Frank agents Linda Zhu, Paul Roberts, Ben Schubert and Dominic Ong handled the sale. The Bridge Street complex was completed in 1999 and was the site of the former Sun Alliance and Royal Insurance Building, Orient Overseas Building, and London Assurance House, which was demolished in 1997. It is now primed for repositioning.

The investment was made via PGIM Real Estate’s flagship Asia Pacific value-add strategy and is predicated on the building’s place in the heart of Sydney’s financial district, and closeness to the revitalised Circular Quay precinct.

The 13-storey property spans about 20,150sq m of A-grade space and has a strong street presence, large floor plates of 1500sq m around a central core design. The building upgrade will be focused on enhancing the plaza arrival, with customer service and hospitality offers in keeping with the area’s status.

This deal marks the return of both firms to the office sector after several years on the sidelines as values corrected. Demand is now being driven by workers returning to offices and limited future ­supply, which has boosted the sector’s outlook.

PGIM Real Estate head of Australia Steve Bulloch said the office sector in Australia had been more resilient than most global markets, but it saw a similar trend in terms of the flight to quality.

“The asset’s strong location, coupled with the significant repositioning plan, allows for us to represent a high-quality asset back to the market but at competitive rents compared to the nearby premium towers,” he said. 

PGIM made substantial investments in Australia’s logistics and living assets last year and Mr Bulloch believes the timing is now right for offices.

Anton Real Estate Partners partner Tony Martin said the building would be adapted to the latest needs of tenants. “With this prime office building, we have a unique ability to meet the requirements and demands of corporate tenants in Australia, which are really focused on a ‘flight-to-quality’ strategy for their offices, demanding best in class space, operational standards, sustainability, amenities and services and all in first class locations,” he said.

Originally published as Proprium and PGIM pay around $250m for Sydney’s landmark 20 Bridge Street building