GPT Group joins scramble for Aurora

October 24, 2009
Singapore Democrats

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Turi Condon
The Australian

After selling $740 million of assets this year, troubled listed property trust GPT Group is lining up for what will be the biggest office tower sale since the start of the global financial crisis.

GPT is investigating the purchase of the $700m Aurora Place office tower in the Sydney CBD, joining around 10 domestic and international groups running final numbers on the Renzo Piano-designed tower before tenders close next week.

GPT chief executive Michael Cameron declined to comment specifically on Aurora Place, saying only that it would fit GPT’s strategy.

Mr Cameron, who took the job in May, has been reinventing the trust, taking it back to its roots as a big domestic landlord of quality office, retail and industrial real estate and selling off other disastrous, mostly offshore, investments.

“We have the capacity both in GPT and in GPT’s funds to acquire such assets,” he said.

“However, we would have to make sure that it first met our investment hurdles.”

Industry sources said GPT was considering the investment for its unlisted office fund. The GPT Wholesale Office Fund, with mostly superannuation funds as its investors, already owns a $3billion portfolio of Australian office buildings.

Other groups looking at the building are believed to include the Government of Singapore Investment Corp (GIC), a sovereign wealth fund that has an 11 per cent stake in GPT.

When asked if GPT would buy assets jointly with GIC, Mr Cameron said only that there was a good relationship with the sovereign wealth fund.

GIC already owns a number of large Australian properties, including Sydney’s Queen Victoria Building.

Others believed to be considering bidding for Aurora Place include the listed Commonwealth Property Office Fund, the Future Fund and global private equity player Carlyle Group.

Carlyle has $US86.1bn ($93bn) of funds under management in 64 funds with investments from aerospace to real estate.

Aurora Place is being sold by the Commonwealth Bank-managed Colonial First State wholesale fund, which has seven superannuation fund investors, including Unisuper, Australian Reward Investment Alliance (ARIA), the Australia Post Superannuation Scheme and Telstra Super.

Unisuper and ARIA are also believed to be interested in maintaining or increasing their stake in the tower.

Tenders for the 44-level building overlooking Sydney Harbour close through agents Jones Lang LaSalle and CB Richard Ellis on Thursday.

The Colonial fund bought Aurora Place in 2001 for $485m. The tower houses lawyer Minter Ellison, whose lease expires in a few years.

The 88 Phillip Street building was valued at $705m in May, down $100m from the year before. Industry sources expect a sale price of between $650m and $700m.

If Aurora Place sells, it will be the country’s biggest office deal since December 2007, when QIC sold Central Plaza, its three-tower Brisbane office complex, for $839.2m.

http://www.theaustralian.news.com.au/business/story/0,28124,26251699-643,00.html