QIC Sells A$555 Million Sydney Tower in Biggest Sale Since 2009

QIC Global Real Estate sold an office tower in Sydney’s center to Australian pension fund REST Industry Super for A$555 million ($522 million) in the biggest single office transaction since 2009.

The property arm of Queensland state’s asset management company sold 52 Martin Place at a capitalization rate of 5.4 percent, according to Richard Butler, senior managing director for international investments at CBRE Group Inc., which marketed the building with Jones Lang LaSalle Inc.

Investor appetite for Australian office buildings has driven total prime-office sales to A$12.8 billion over the 12 months to June 30 from A$7.1 billion in 2011, resulting in a drop in yields of 58 basis points in Sydney’s center over the last two years, according to CBRE data. The yield on the sale of 52 Martin Place compares with the Sydney center average of between 5.75 percent and 6.25 percent for premium offices, figures from Savills Plc show.

“Demand for investment grade stock is as strong as I’ve seen it,” said Steven Leigh, managing director of global real estate at QIC, adding the asset manager sold the building to rebalance weightings in the fund that held it. “The sources of capital range from global sovereign wealth funds and fund managers to local industry super funds and local listed entities.”

Super fund is the local term for a pension fund.

The sale is the largest since the South Korean National Pension Fund’s purchase of the Aurora Place office tower in Sydney for A$685 million in December 2009, according to CBRE.

Becky Roberts, an external spokeswoman for REST Super, didn’t immediately respond to an e-mailed request for comment.

QIC Expanding

QIC is still seeking other properties in Australia, and will continue to expand its real estate assets under management in the nation, Leigh said. The company has A$12.5 billion under management, with A$11 billion of that in Australia.

“We are very active in sourcing new stock in Australia,” Leigh said in an e-mail. “There is still opportunity for the occasional deal but the market is crowded making it very difficult to acquire assets.”

QIC is also managing investments for pension fund Australian Super in residential land development, and has begun investing in smaller convenience-based retail centers for its QIC Active Return Fund, Leigh said.

The group, which manages A$1 billion of properties in the U.S., is also seeking more assets there, he said.

“The U.S. market, by virtue of its size, continues to provide more buying opportunities than Australia,” he said.

Before it's here, it's on the Bloomberg Terminal.