Vendors push to wrap up $2b disposals
Asset sales by portfolio owners and selected properties worth about $2 billion are being touted across the country as investors prepare for the run-up to the end of the financial year.
While some deals have been in the market for months, the vendors are said to be pushing buyers and their agents to get the deals completed in the next three months.
Included in these are about $300 million of NSW government properties being sold through Macquarie Group. Investec's deputy chairman, Geoff Levy, is also running the sale of the seven properties as part of his role at the government's Property Asset Utilisation Taskforce.
The key assets in the portfolio, which are likely to be leased back to the government, include Bligh House at 4-6 Bligh Street and 207 Kent Street, at the northern end of the city's growing western corridor.
But agents say the sale has hit a bump due to a dispute over valuations, which the government maintains are too low.
Charter Hall and the revamped Arena Investments, formerly Orchard Funds Management, which Morgan Stanley took over and rebranded, have been said to be the front runners in the tender process.
The two groups are willing to take on the portfolio and either on-sell the lesser quality properties or redevelop them and place them into a wholesale fund.
The sales coincide with the ongoing sale of the $1.5 billion GE Capital assets. Suggested interested parties remain Blackstone and the Hong Kong-based Pacific Alliance Group.
Mirvac is said to be interested in individual assets including 210 George Street, but analysts believe the new Mirvac chief executive Susan Lloyd-Hurwitz wants to complete her strategic review, due in May, before making large acquisitions.
Other tenders due to be awarded in the coming week are for the redevelopment of the ports at Botany and Kembla.
Nicholas Crothers, director of industrial research for Jones Lang LaSalle, said against the backdrop of the potential deals in the market, the super prime assets, industrial and office, are the ones that will have the majority of yield adjustment this year.
"The commercial property investment market is heating up. Most discussion has been about how much yields will compress this year, not if it will happen," he said.
"The majority of analysis has focused on the prime segment of the market. The Jones Lang LaSalle Research view is that further moderate yield compression for prime grade assets is likely this year; better quality assets (super prime) will see the majority of yield adjustment, resulting in wider spreads in the prime yield range and wider spreads to secondary assets."