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Manulife Real Estate Moves Into Australia

Toronto-Based Company Has Six-City Asian Strategy and Is Buying 14-Storey Tower in Melbourne
January 31, 2018
Pictured: Ted Willcocks, global head of asset management, Manulife Real Estate.

Manulife Real Estate is making its first move into the Australian market with the purchase of a 14-storey, Class A, 317,335-square-foot building located in what is a growing extension to Melbourne's central business district.

The Toronto-based company, which now owns more than 62 million square feet of office, industrial and select retail and residential properties across Asia, Australia, Canada and the United States, said the property at 800 Collins St. was built in 2010 and is located in what is called the Docklands Central Business District.

Manulife paid $295.2 million Australia dollars for the building, which is the Melbourne headquarters of retail giant Myer.

"This is our first acquisition in Australia, and it’s directly related to a direct core multi-city pan Asian real estate investment strategy designed to support our growing businesses in Asia," said Ted Willcocks, global head of asset management, Manulife Real Estate.

The plan has already taken the company to Singapore, and Sydney, Shanghai, Hong Kong and Tokyo are on the horizon. "We think Australia is one of the most stable, developed economies globally. It’s really a strong domestic economy," said Willcocks.

In terms of comparison to Canada, Willcocks said similarities can be found with Australia in cap rates, pricing, rental rates, vacancy and supply dynamics. "We see growth in Asian markets, and that’s why we are actively pursuing the strategy," said Willcocks. “Some would view Canada as well along in the cycle but we are obviously long-term holders."

In its six-city Asian move, Manulife is focusing on a core office strategy. "We did an extensive study and strategy on the best risk-adjusted return in the region given the complexities of say multifamily and the returns. And you speak very broadly about the region. China is not Australia," he said.

What drove Manulife to focus on office was the similarities among the office class in the six cities that it is targeting. "You could see us break out and have some variations that come over time. We could get into logistics into the region as well,” said Willcocks.

In the United States, while Willcocks said Manulife is still buying office, the company is increasing its allocations in a greater proportion to multifamily and industrial. "We now have more than a US$1 billion book, 3,500 units across the U.S. and continue to grow our multifamily. We are developing in Atlanta, Washington, Boston, San Francisco and like the build to core (strategy) in multifamily."

In Canada, Willcocks said there has been limited investment activity and opportunity, but with cap rates dropping near historic lows the market is opening up. "The pricing is drawing out more vendors and last year was one of largest volume years in recent years, in terms of investment activity," he said.

Garry Marr, Toronto Market Reporter  CoStar Group   
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