Mirvac sells 50 per cent stake in Riverside Quay

Darling Park, Sydney
Darling Park, Sydney
Mirvac'??s Riverside Quay development, which will accommodate PwC from 2017.

Mirvac'??s Riverside Quay development, which will accommodate PwC from 2017.

Mirvac Group has entered into an agreement with ISPT, one of Australia's largest unlisted property fund managers, to sell a 50 per cent interest in its office development at 2 Riverside Quay, Melbourne, for $106 million.

In a separate deal, IAG Insurance has confirmed it is to move its headquarters to Darling Park, Sydney, in one of the biggest lease deals for the past year.

IAG has called 380 George Street home for many years but moving to Darling Park Tower 2 means it will be able to consolidate all its Sydney city properties, including 347 Kent Street and 309 Kent Street Sydney, under one roof. It will lease   the entire low and mid-rise floors, spanning about 33,000sqm.

The insurance group is scheduled to relocate in 2018 for a lease period of 12 years, replacing the present tenant, advisers and accountants PricewaterhouseCoopers (PwC), which is moving to nearby Barangaroo,  the so-called new financial hub of Sydney.

IAG joins large-scale, blue-chip tenants in the Darling Park precinct, including Commonwealth Bank of Australia and Rabobank. At Barangaroo, the main tenants will be Westpac, HSBC, KPMG and lawyers Gilbert & Tobin. There are also suggestions Marsh Mercer may look to move to the area from Darling Park.

Speaking on behalf of the co-owners, GWOF fund manager Martin Ritchie said securing IAG was an excellent outcome and the co-owners were looking forward to welcoming the insurance industry market leader.

The premium, 5-star NABERS-rated office at Darling Harbour is jointly owned by the GPT Wholesale Office Fund (GWOF), AMP Capital Wholesale Office Fund (AWOF) and Brookfield.

AWOF fund manager Nick McGrath said the IAG lease comes after the fund, which has assets of $3.6 billion as at November 30, follows the extension of the Perpetual lease at Angel Place, Sydney, to 2025 and the addition of new tenant Willis Australia, and the relocation of Bupa from 50 Bridge Street to NAB House, Sydney.

In Melbourne, once completed, the 21-storey, A-grade office building of more than 21,000sqm will be the new home of PwC.

Under the deal, ISPT will fund 50 per cent of the total development costs throughout the construction, and Mirvac will provide a five-year rental guarantee on any unlet office and retail space from the date of practical completion.

Mirvac will provide development and property management services for the asset, and is the same style of deal it has undertaken with 699 Bourke Street in Melbourne and 200 George Street in Sydney.

Mirvac chief executive Susan Lloyd-Hurwitz said 2 Riverside Quay is set to become a highly innovative and modern workplace in an increasingly popular business location.

"The asset is already substantially de-risked, with PwC's commitment to lease 17,200 sqm of office space, or 82 per cent of total office net lettable area, for an initial 12-year term.

"The transaction is in line with our strategy to secure high-quality capital partners, with Mirvac retaining a 50 per cent interest in the completed asset" she said.

Early works at 2 Riverside are under way, with completion expected in mid-2017. The property will have a green-star sustainability rating of 5.

This story Mirvac sells 50 per cent stake in Riverside Quay first appeared on The Sydney Morning Herald.