Hong Kong based Link REIT has made its first property investment outside of Asia, outlaying $683 million for an office at 100 Market Street in the Sydney CBD.
The deal with US-based private equity giant Blackstone is being struck on a low 3.9 per cent passing yield.
Blackstone picked up the asset last June as part of a $1.52 billion deal for three SCentre properties.
Link REIT’s new office is part of a mixed-use development also bound by the Pitt Street Mall and Castlereagh Street, comprising the high-profile Sydney Tower and a shopping centre.
The Strand Arcade, Myer, State Theatre and David Jones are in the immediate vicinity.
Over 10 floors, 100 Market Street contains 28,385 square metres of lettable A-grade area with large 3000 sqm floor plates.
Last refurbished 10 years ago, and fully occupied with a weighted average lease expiry of 8.45 years, the investment returns net annual income of $26.7 million.
Link REIT said in an investor relations presentation that the purchase price was in line with a recent Colliers International valuation.
Predominantly a shopping centre investor, Link REIT, managed by Link Asset Management, holds 131 assets in cities including Beijing, Guangzhou, Shanghai and Shenzhen.
It intends to re weight its HK$200 billion ($A37 billion) portfolio by 2025 so that up to 10 per cent of its holdings are non-local (at present, 87.5 per cent of its investments are tied to Hong Kong assets with the balance in mainland China).
As part of that plan, it said, Link REIT will look to car park and office property as well as more retail complexes.
Australia, Singapore, Japan and the United Kingdom are on its radar.
The 100 Market Street deal, subject to approval Foreign Investment Board approval, is expected to settle early this year.