A record $4 billion-plus of cash is to flow through the local office and industrial property markets in the coming weeks as the bidders get to the finish line for the major portfolios of Investa and the Singapore government's investment arm.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The line-up of potential buyers for both includes a range of Australian real estate investment trusts, local super funds and overseas private equity groups, all searching for higher yielding assets in the current low environment.
The deadline for the last stage of the Investa assets, which includes the management of the listed office fund, was July 7 and now the vendor, Morgan Stanley and the advisers UBS, will sift through the submissions before starting the final round of discussions.
At stake is about $2 billion of assets under the Investa Office Fund umbrella and the management rights to the whole of the $6.5 billion Investa platform, the value of which analysts have estimated at about $800 million to $1 billion.
The main contenders are DEXUS Property and its partner, the Middle Eastern fund, ADIA;, Brookfield, whose infrastructure arm, made a $9 billion bid for Australia's largest ports and rail operator, Asciano, last week; Cromwell, which has teamed up with South African real estate company Redfine Properties; private equity giant Blackstone; as well as LaSalle Investment Management, which has teamed up with the Chinese Investment Corporation.
It is expected that the final decision will made within two weeks.
Analysts have said that once the documents have been finalised, a round of asset sales will ensue across the country as the new owner repositions the portfolio, taking into account any joint ownerships and pre-emptive rights on the property.
Investa is also jointly developing the $750 million office tower at 60 Martin Place.
According to JP Morgan's Richard Jones, the current portfolio transactions of Investa and GIC, are likely to trade 10 per cent-plus above book values (ungeared).
He said in the case of DEXUS, its high office exposure leads to greater variance between its capitalisation rate and cash flow due to high incentives, relative to its largely retail peers.
Buyers of the Singapore GIC's Australian logistics portfolio are expected to pay about $1 billion, when the first rounds of bids close on July 8.
The GIC portfolio is being sought by local fund managers, with Propertylink and Elanor Investors Group, competing against Stockland, Mirvac and Charter Hall, among those vying for the assets alongside international heavyweights.
It comes as agents say they have never seen stronger demand for industrial and logistics assets.
Gavin Bishop, director of industrial at Colliers International, says supply is limited and the weight of money from overseas investors, has boosted the Australian sector.
