And then there were three: bidders focus on Westpac Place stake
The world’s largest owner of real estate, Blackstone, will look to double its money from its stake in a Sydney landmark, Westpac Place, with a third round of bidding underway and the price rising to $850 million or more.
Motivated bidding has pushed the yield on one of this year’s most anticipated deals to 4.5 per cent or below, in a sign that pricing on blue-chip office property is yet to slacken.
Competing for the prize at 275 Kent Street are local funds managers Charter Hall and GPT, which are bidding for their wholesale arms, along with Deutsche, which is representing Korea’s National Pension Service.
A second round of bidding closed last week and many in the market had expected a preferred bidder to picked from that crop.
Instead, local super fund investor ISPT and JPMorgan Asset Management, which is acting for the Hong Kong Monetary Authority, have already put away their cheque books as the numbers rose.
The third round is expected to close later this week. Whichever party emerges with the prize after that, it will be an emphatic vindication of Blackstone’s “buy it, fix it, sell it” strategy.
The US-based group purchased its half stake in 275 Kent Street for $435 million in 2014 from Mirvac, which still holds half, and quickly renegotiated large leases with Westpac.
Mirvac holds its remaining stake at a book value of $555 million.
In the original deal with Mirvac, Blackstone purchased Kent Street at a premium to book value on an initial passing yield of 6.65 per cent.
Net operating income from the asset is just under $80 million. Current bidding values the entire 77,000 square metre building at $1.7 billion or more.
Blackstone appointed JLL’s Rob Sewell and Paul Noonan and Savills’ Simon Fenn, Ian Hetherington and Ben Azar to broker the property at the start of this year.
The scale of the looming transaction rivals recent headline deals in Sydney involving investment into development projects.
In April, super fund Rest signed on for a one third stake, worth $900 million, in AMP Capital’s Quay Quarter which will deliver 97,000 square metres of space.
Last September, AMP Capital and its mandate combined to take close to a half stake in the Wynyard Place project for $953 million. That deal was struck on a 4.77 per cent cap rate. The rate per square metre for the Wynyard Place transaction was $25,449.
