Dexus to Sell Stake in Australia’s First Mass Timber Building

International House is part of the Lendlease International Towers Sydney Trust and was at the forefront of mass timber adoption Australia

Thu 14 Sep 23


Dexus is looking to offload $1.2 billion of assets in Sydney and Melbourne office towers in the latest test for a market battered by rising rates and weakened demand.

Wood Central understands that the Canada Pension Plan Investment Board, which manages Dexus, wants to sell down 10% from its $4.7 billion interest in Lendlease International Towers Sydney Trust. 

As reported by the AFR, the unlisted fund owns Tower Two and Tower Three at Barangaroo, along with the timber office building, International House Sydney, and the Towns Place Car Park.

The award-winning International House was Australia’s, and for a time, the world’s tallest timber office building.

In recent years, Australia has established itself as a major player in mass timber construction, as evidenced by projects such as the proposed Milligan Group’s hybrid timber tower and the Atlassian Central Tower

Australia is making waves in the realm of mass timber construction, with ambitious projects like the Milligan Group's hybrid timber tower and the Atlassian Central Tower showcasing the nation's commitment to sustainable practices and leading the charge towards a more eco-friendly future. (Photo credit: AAP)
Australia is making waves in mass timber construction, with ambitious projects like the Milligan Group’s hybrid timber tower and the Atlassian Central Tower showcasing the nation’s commitment to sustainable practices and leading the charge towards a more eco-friendly future. (Photo credit: AAP)

And International House was at the forefront of that push.

Designed by Tzannes Architects and developed by Lendlease, it was constructed entirely from cross-laminated timber (CLT) and glue-laminated timber (glulam), and is supported by a conventional ground-level concrete structure.

International House in Sydney was designed by Tzannes (Image Credit The Gutherie Project)

Speaking to Architecture AU, Tzannes director Alec Tzannes said in 2016 that environmental considerations directed the design of the building.

“The architecture of International House Sydney reflects a new form of beauty,” he said, adding that “beyond shape and surface, it is ‘deep design’, renewing architecture’s role to serve the greater social purpose of lowering carbon emissions.”

Redners from the building, which, for a timer, was the world’s tallest engineered timber building.

The seven-storey building includes a collonaded form at its base to evoke a forest. 

Internally, the architects decided to fully expose the timber structure, leaving out additional layers of finish.

“Looking from the bridges leading to Barangaroo, through the clean glass skin, the multi-storey timber structure forms the character of the architecture,” the practice said.

It has previously been the recipient of multi-awards, including the Property Council Best Development of the Year and the World Architecture Festival Building of the Year announced in Amsterdam.

“It evokes the same feeling that from inside creates an interior environment reminiscent of the spaces often found in Sydney’s historic timber or cast iron and brick buildings from the era when warehouse buildings were crucial to Australia’s maritime economy.”

The offering through JLL is for a position in the fund – sometimes known as a recapitalisation – alongside other institutions, including Singaporean sovereign wealth investor GIC, Dutch pension giant APG and a Lendlease-managed fund. CPPIB itself will retain a stake.

The Barangaroo international office towers in Sydney. (Photo Credit: Joshua Dasey)

So far, landlords are holding the line, arguing that the best towers will ride through the disruption with little loss of value while acknowledging secondary buildings unloved by tenants could suffer heavier write-downs.

Darren Steinberg, who heads Dexus, has said the property sector in Australia is about 12 months through a two-year grind to the bottom of the cycle.

This week, the veteran property executive told the Financial Review Property Summit that valuations for the best quality assets could fall another zero to 5 per cent, while second-tier assets could fall by another 10 per cent to 20 per cent.

“There are buyers out there, and there’s a lot of people looking, but no one wants to catch the falling knife,” he said.


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