Another Grade A office tower at 40 Miller Street in Sydney's north was sold to US global investment manager Barings for about $145 million, a discount of close to 14%.
Mitsui Fudosan Australia has taken a 66 per cent stake in Mirvac's planned office building at 55 Pitt Street in Sydney, but the company did not confirm a start date for the 55-storey tower or whether the office MinterEllison lawyers will be the tenant.
367 Collins Street, Melbourne Credit: Elke Meitzel
Mirvac chief executive Campbell Hannan said the group had met its asset sales target of $1 billion, adding that more details would be released with its full-year results in August.
Meanwhile, Dexus traded contracts on three assets worth $383.2 million in June.
One of these was 5 Martin Place in Sydney, which is owned by Cbus Property. The super fund snapped up half of the remaining shares from joint owners Dexus and the Canada Pension Plan Investment Board for $310 million, at a 24% discount.
loading
“[The] Investment metrics shown by recent sales activity support a reduction in office market valuations,” said Dexus CEO Ross Du Vernet.
“However, as a long-term investor, we are confident in the value of our high-quality portfolio throughout the cycle. There is continued demand from occupiers for well-located, high-quality buildings such as it is seen in the employment of our portfolio,” said Du Vernet.
Melbourne-based Growthpoint's portfolio is also falling. The value of 45 of its 57 directly owned assets has fallen $182.4 million or 6.2 percent. Moelis Australia analyst Edward Day said Growthpoint's “peak-to-bottom” drop is about 20 per cent.
New chief executive Ross Lees said the decline in the external valuation draft is expected to translate into a 25¢ per share reduction in the group's net tangible assets.
Analysts at Citi said the office sector remains “challenging” and is not yet at an inflection point where values will grow.
“Underlying tenant demand, corporate cost reductions and overall high vacancy and incentive levels continue to pressure the subsector's growth outlook,” Citi said.
“We also anticipate further pressure on office capitalization rates in June and potentially in the December reporting periods as inflation and interest rates remain stubbornly high.”
“We see little catalyst for a near-term revaluation relative to the fastest-growing subsectors,” the analysts said.
