“We are going to build relationships with the local authorities and try to find some development sites.”
The company with $C58 billion ($61 billon) in assets under management already owns rights to develop the office component of the $2 billion Central Barangaroo project..
Oxford will wait for the legal tussle over harbour views between Lendlease, Crown and the NSW government to be resolved but won’t be deterred if the opportunity folds.
In the meantime, the company will give the Investa platform – which includes Sydney’s Deutsche Bank Place – a value-add sprucing up.
It will sell some buildings deemed non-core, such as those in smaller and less liquid markets like Perth, carry out pre-committed refurbishments at buildings like 388 George Street, Sydney, and over time, buy more properties, Mr Brundage said.
Core and non-core
“One person’s core is another person’s non-core. Recycling capital is something we have always done,” he said.
“There’s opportunity to drive customer satisfaction, leasing opportunities and performance that might not have existed when it was managed by an Australia-only company. We see that play out every time we have gone to another market.”
Beyond offices, in commercial property, the firm will look at industrial and logistics property but is unlikely to take on shopping centres.
“We entered via offices, we will stay in offices, but being here gives us the opportunity to look at other asset classes,” Mr Brundage said.
“The big thrust around the world is sheds and barns particularly in America and we would like to figure out how to do that here.”
“We have a growing multifamily build-to-rent business in the UK and North America … those are the kinds of things we could significantly increase the amount of capital invested already.”
Mr Brundage said there was potential to overcome low yields in multifamily or build-to-rent apartments – mass apartments owned by one institutional for rental – through ground-up development. The slumped housing market might even throw up some buying opportunities.
Oxford sees lots of value in Australia, particularly in Sydney and Melbourne, despite a yield compression.
“The challenge is about stock selection and we are not buying the index here,” Mr Brundage said.
“Is there a pressure on cap rates? Maybe, but there’s pressure on capitalisation rates all over the world.”