One the Esplanade is mostly sold two years before completion
GIC has signalled its continued interest in Australia with the purchase of a quarter stake in Chevron’s under-construction headquarters building in Perth from asset management firm Brookfield.
The Singaporean sovereign wealth fund agreed to pay A$220 million ($170.3 million) for its share of the 29-storey One The Esplanade office tower in the Elizabeth Quay precinct of Western Australia’s capital. US oil giant Chevron has committed to leasing 42,000 square metres (452,084 square feet) of the waterfront project’s net lettable area.
Including a three-level retail podium and ancillary space, the development has an NLA of 56,531 square metres, meaning GIC is paying roughly A$15,567 ($12,046) per square metre.
Canada-based Brookfield, which sold a 50 percent stake in the property to Invesco for A$500 million in early 2020, retains 25 percent ownership.
“We are thrilled to be partnering in the ownership of this ‘best in class’ building being developed for the Perth market,” said Ruban Kaneshamoorthy, head of real estate investing for Australia at Brookfield. “The transaction shows resilient demand for the Perth office market and reflects another example of Brookfield creating value by bringing de-risked development opportunities to our investors and strategic capital partners.”
Unshakeable Faith
Construction of One The Esplanade is scheduled for completion in 2023, when Chevron plans to move in. The tower at full height will boast “exceptional views” south over the Swan River and east over the Supreme Court Gardens and Langley Park, Brookfield said. In addition to offices with a typical floorplate size of 2,017 square metres, the development will feature retail shops, restaurants, a gym and childcare facilities.
Ruban Kaneshamoorthy of Brookfield
The stake purchase affirms GIC’s faith in an Australian commercial property market that saw deal volume plunge 45 percent in COVID-stricken 2020, according to data released this week by Real Capital Analytics.
The sovereign fund’s Down Under investments last year included big bets on industrial and logistics assets. GIC opened 2020 by paying A$366.1 million to acquire an additional 24 percent stake in Dexus Australian Logistics Trust, upping its interest in the warehouse vehicle to 49 percent.
Last March, the fund joined forces with Hong Kong-listed logistics titan ESR for the ESR Australia Logistics Partnership, with GIC investing A$450m in the vehicle targeting income-producing assets. Then in June, GIC committed A$400 million to a newly formed A$1 billion develop-to-hold logistics fund partnership with ESR.
In August, GIC teamed up with Aussie property group Charter Hall to buy a 49 percent stake in a portfolio of convenience stores operated by Ampol, Australia’s biggest refiner, for A$682 million.
Oilmen on the Move
Chevron in 2013 paid A$64 million for the lot at Elizabeth Quay, vowing to establish its Australian headquarters there. It sold the land to owner-developer Brookfield in 2019.
For 10 years until last April, Chevron was based at the 14-storey Stamford Green office complex on Hay Street in Perth’s central business district. That property changed hands last month, with Stamford Land Corporation selling out to fellow Singaporean firm Redhill Partners.
The 40-storey QV1 tower in downtown Perth remains Chevron’s home as the energy firm waits for work to conclude at Elizabeth Quay.
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