Kumpulan Wang Persaraan (KWAP), Malaysia’s second-largest pension fund, has sold a key asset in Sydney’s central business district for around AUD$340m, (€233m) setting a new record for A-grade office buildings in Australia.
Such was the competition for the building that it was sold to a Hong Kong-based purchaser before the deadline today for expressions of interest.
It sold on a core yield of about 4.6% and is leased to the Australian Securities Exchange (ASX) on a long-term lease.
Known as Exchange Centre, at 20 Bridge Street, the building is managed by Investa Office Fund. In a statement, Investa confirmed that contracts had been exchanged.
Investa said the building was marketed for sale by Savills through a global expressions of interest campaign, with bids due on 27 April.
ASX occupies 45% of the space and recently extended its lease to June 2028. The property, completed in 1999, has a weighted average lease expiry over seven years, with occupancy of 96%.
KWAP has made a capital gain of 84% on the investment, which it acquired in a distressed sale when its then owner fell into financial difficulties in the wake of the global financial crisis. The fund paid AUD185m for the building in late 2011.
The sale had been mooted since last year when KWAP’s chief executive, Wan Kamaruzaman Wan Ahmad, told the media that the pension fund had received strong off-market bidding for the building.
“We have expressions of interest from both Australian and global players. If the price is right, we will sell,” Wan Kamaruzaman said at the time.
He also described KWAP as “underinvested” globally, but added: “We are not sentimental about investments”.
In March last year, KWAP sold an office building in London’s financial district for £270m to the Hong Kong-based private investor Shaw Foundation.
However, a source told IPE Real Estate that Shaw Foundation was not the buyer of the Sydney building. The buyer is a wealthy Hong Kong family office group, interested in the asset for its yield income.