Charter Hall closes in on Westpac Place

Charter Hall closes in on Westpac Place

11 May 2018

This year’s biggest commercial office deal is coming to a head, with Charter Hall mooted as the likely suitor for Blackstone’s half-stake in Sydney’s 77,000-square-metre Westpac Place tower.

The Australian Financial Review reports that the deal is likely to be north of $850 million, representing a yield of less than 4.5 per cent, which will likely set a fresh benchmark for major ­Sydney ­assets.

As flagged by The Australian Financial Review last month, Charter Hall, GPT and Deutsche, representing Korea’s National Pension Service, were among the principal contenders for the trophy asset leased to Westpac for another 12 years. There is also interest from ISPT, JPMorgan Asset Management and Investa. JLL’s Rob Sewell and Paul ­Noonan and Savills’ Simon Fenn, Ian Hetherington and Ben Azar are negotiating the deal.

The US-based Blackstone purchased its half stake in the property for $435 million in 2014 from listed group Mirvac, which still owns the other half stake, meaning that Blackstone would more than double its money in four years.

The Australian reports that Mirvac is likely to need to find a deep-pocketed partner to match the Charter Hall bid and it appears to be ­focused on other deals in Sydney and Brisbane. Either way, the deal will not be completed until rights held by the building’s co-owner, Mirvac, are either exercised or it passes on the chance to take back full ­control of the tower.

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 97,000sq m 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

Blackstone continue to grow globally and recently reached a deal to buy commercial property asset manager Gramercy Property Trust for $7.6bn, adding to the holdings of the world’s largest property manager. The deal comes after Blackstone announced another acquisition in March, planning to pay roughly $1.8bn for Canyon Industrial Portfolio’s collection of warehouses and distribution centres in major US cities, reports The Financial Times.