The Australian Business Network

EG has bought two major office assets in Carrington Street, Sydney, from Swiss Re and Brookfield

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Local buyers are setting a crisp pace in the office market with funds house EG and Lendlease’s investment arm finalising deals to carve up the $600m-plus Swiss Re portfolio.

The pair have swooped on big towers in Sydney and Melbourne in a sign that buyers are willing to punt that workers will return to their desks and values will hold.

The Swiss Re portfolio went to market at the start of the year and manager AMP Capital has delivered strong returns from both the office and industrial assets.

In the largest sales, Sydney-based real estate fund manager EG swooped on a portfolio of three office assets for about $450m, boosting its Australian Core Enhanced Fund, with a series of purchases from both reinsurance giant Swiss Re and Canada’s Brookfield.

The trust, which now has eight assets with a total value of about $700m, has been one of the most active buyers of property this year.

It picked up most of the buildings out of the Swiss Re portfolio, including 32 Walker Street in North Sydney, and interests in two buildings in Carrington Street in the Sydney CBD.

The buildings — at 50 and 60 Carrington Street — are in a precinct that is being transformed by improvements to Sydney’s transport network, including the new metro network and the light rail.

The split has not been revealed but EG allocated about $95m for 32 Walker Street and bought 50 Carrington Street for about $220m, with 50 per cent acquired from each of Swiss Re and Brookfield in the case of that asset.

It picked up a half interest in 60 Carrington for about $150m but there was also adjustments of about $15m applied across the portfolio.

The Swiss Re deals were handled by Luke Billiau and Simon Storry of JLL, with Brookfield advised by Josh Cullen, Steve Kearney and Mark Hansen of Cushman & Wakefield.

EG said the portfolio includes sites in core locations across Sydney CBD and North Sydney, close to major transport nodes that will benefit from major public and private infrastructure investment.

It was secured via an on and off-market sales process with a total of 32,454sq m of net leaseable area, 93 per cent occupancy and a weighted average lease term of 2.9 years.

“The portfolio fits well with the investment strategy to acquire well located assets where value can be added over time. We have high conviction in the precincts and the Sydney CBD office market over the long term,” fund manager, Michael Noblet, said.

“EG’s Australian Core Enhanced Fund, currently has approximately $500m of capital for further acquisitions, following a recent equity commitment into the fund from a leading European investor,” Mr Noblet said.

In Melbourne, Lendlease is preparing for its next run of developments and has snapped a LaTrobe Street office tower for $203m in the Melbourne CBD.

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The group purchased the building at 469 Latrobe Street as part of the sales by reinsurance group Swiss Re. The deal gives the developer controls of the tower that sits next to its adjoining 485 LaTrobe Street.

Long-term, Lendlease will have a significant redevelopment site overlooking Melbourne picturesque Flagstaff Gardens

Developers are undeterred by recent lockdowns as major corporations press ahead with demand for modern office space.

The Swiss Re deals were brokered by JLL’s Mr Billiau and Mr Storry with the Melbourne deal also handled by CBRE’s Kiran Pillai and Scott McGlone.

The exit is a coup for AMP Capital as Swiss Re bought earlier in the property cycle and will exit at a handsome profit.

The deal is also in keeping with Lendlease’s desire to keep it’s development pipeline rolling, adding new buildings under it’s APPF commercial series.

The same fund is also buying a half stake in Sydney is 200 George Street overlooking Circular Quay in a deal valuing the entire tower at $1.15bn.

Both buys are in keeping with the developers plan to expand its holdings and garner more funds under management.