Allianz Real Estate and National Pension Service (NPS) of Korea have agreed to acquire a 50% stake in Sydney’s Commonwealth Bank Place for A$625m (€390m) from Abu Dhabi Investment Authority (ADIA).

Australian Prime Property Fund–Commercial, an unlisted office vehicle, managed by Lendlease, holds the remaining 50% of the building, known as Darling Quarters, located on the fringe of the central business district in Darling Harbour.

The asset will be held in AREAP Core I fund, owned equally by the Allianz group of companies and NPS and managed by Allianz Real Estate. The vehicle is a US$2.3bn (€2bn) investment platform.

Rushabh Desai, Asia-Pacific CEO for Allianz Real Estate, told IPE Real Assets that this was APEAP Core 1’s second investment in Australia.

“The first was a portfolio of newly-built prime student housing assets in Melbourne,” he said.

Asked about concerns of the slow recovery of the Sydney office market in the wake of the pandemic, Desai said: “We are optimistic about the long-term potential of prime office assets in Sydney CBD. This asset has a 12-year WALE (with fixed escalations) and thereby is insulated from any short-term volatility in the occupational market.”

He said Sydney remained the key gateway city for Australia. “With global COVID situation trending towards an endemic, we are hopeful the economic activity will pick pace in Australia in tandem with the rest of the world.”

Desai said that, with this transaction, about 80% of capital commitment in the AREAP Core I venture, which was established in the third quarter of 2020, had been deployed.

“For the remaining 20% of capital available in AREAP Core I, I would like to prioritise logistics investments preferably in China and Japan and selective office investments (prime CBD, business/tech parks, life sciences),” he told IPE Real Assets.

Danny Phua, Allianz Asia-Pacific head of acquisitions, said: “The pandemic has re-emphasised the importance of micro-location, city density, asset quality and ESG when investing in an office asset.

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