Singaporeans swoop on Woolies HQ in $450m deal

Singaporeans swoop

on Woolies HQ in $450m deal

Sep 8, 2021

Australia’s biggest suburban office transaction is on the verge of being sealed with Singaporean fund manager AIMS APAC REIT set to pay more than $450 million for the Woolworths headquarters in Bella Vista, north-west Sydney.

AA REIT, as it is known, is in exclusive due diligence to buy the sprawling office campus from owner Inmark Asset Management, which paid Mirvac $336 million for the long weighted average lease expiry (WALE) asset five years ago.

Woolworths’ sprawling headquarters at Bella Vista in north-west Sydney. 

In a further sign of increased institutional investor demand for long WALE property, AA REIT will be acquiring it on a capitalisation of just over 5 per cent compared with the 6.07 per cent Inmark paid in early 2016.

The bullish result was also achieved despite the property being marketed during Sydney’s COVID-19 lockdown, inhibiting inspections but not depressing interest.

There was an even split of local and international bidders, with interested parties including Charter Hall, Growthpoint Properties, LaSalle Investment Management and Centuria Capital.

Driving investor interest was a 10-year net lease to blue-chip tenant Woolworths, Australia’s largest food retailer, with annual rental increases of 2.75 per cent, and development upside.

Suburban office record

The site includes nine hectares of land, 45,000sq m of net lettable area over three office buildings with floor-plates of more than 3000sq m, an onsite Woolworths Metro supermarket, gym, data centre and 3000 car spaces.

Scope also exists to develop a further 120,000sq m of commercial floor space.

At more than $450 million, the sale is believed to be the largest for an Australian suburban office, exceeding the $438 million paid by Starwood Capital and Arrow Property for the Zenith Centre in Chatswood, Sydney.

The sales process was run by CBRE’s James Parry, Flint Davidson, Stuart McCann and Michael Andrews and Colliers’ Adam Woodward, James Mitchell and James Barber, with neither company prepared to comment when contacted.

AA REIT is listed on the Singapore Exchange and owns 28 mostly industrial assets valued at S$1.8 billion ($1.81 billion).

The Bella Vista property will be AA REIT’s third investment in the Australian market.

It also owns 49 per cent of the Optus Centre in Sydney’s Macquarie Park, a stake it values at S$323 million, and the Boardriders APAC HQ at Burleigh Heads on the Gold Coast, worth S$44 million.

Dexus sale

Foreign investors have become increasingly ubiquitous, with a number of major recent transactions featuring overseas capital, most notably the $3.8 billion acquisition of the Milestone portfolio by ESR and GIC.

Investor attention now shifts to the sale by Dexus of five office buildings – four in Sydney and one in Brisbane – worth an estimated $1.75 billion as it looks to raise and recycle capital through a series of “city shaping” projects.