This article is from the Australian Property Journal archive
MORGAN Stanley has sold Investa Property Group's office portfolio to sovereign wealth fund China Investment Corporation (CIC) for more than $2.5 billion on a tight 5% yield, in the largest real estate deal in Australia's history.
/* Style Definitions */
table.MsoNormalTable
{mso-style-name:”Table Normal”;
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:”;
mso-padding-alt:0cm 5.4pt 0cm 5.4pt;
mso-para-margin:0cm;
mso-para-margin-bottom:.0001pt;
mso-pagination:widow-orphan;
font-size:10.0pt;
font-family:”Times New Roman”,”serif”;
mso-fareast-language:EN-US;}
The sale price is significantly higher than the face value of $1.9 billion.
Morgan Stanley and CIC signed off on the deal last night after the world`s fourth largest sovereign wealth fund trumped powerhouses LaSalle Investment Management, the Cromwell and Australia`s Future Fund joint venture, the Dexus Property Group/Abu Dhabi Investment Authority JV and Blackstone for the coveted portfolio.
The portfolio comprises whole and part interests in nine properties including 120 Collins St Melbourne; 126 Phillip St Sydney; 225 George St Sydney; 400 George St Sydney; 1 Market St Sydney; 80 Pacific Hwy North Sydney; 55 Market St Sydney; 31 Market St Sydney and 410 Ann St Brisbane.
The portfolio has a passing fully let income of about $145 million.
The acquisition increases CIC`s foothold in Australia after the fund launched into the country in late 2013 with the $305 million acquisition of Centennial Plaza.
CIC is the fourth largest sovereign wealth fund in the world with assets under management exceeding $US220 billion.
Earlier this month CIC posted a return rate of 5.5% from overseas investments and recently paid 1.3 billion Euros for the CBRE Global Investors retail portfolio.
The office portfolio sale leaves Morgan Stanley with the task of offloading Investa Office Management and Investa Land.
IOM provides asset and property management services to over $8.9 billion of commercial office assets, including the listed AREIT Investa Office Fund (IOF), Investa Commercial Property Fund (ICPF), private mandates and IPT.
The fight for management rights is between LaSalle Investment and Mirvac Group, although the Investa funds are also exploring the possibilities to internalise their management.
Meanwhile the most complicated process for Morgan Stanley remains, that is Investa Land.
Investa Land develops industrial and residential projects with a pipeline of over $4.3 billion, consisting more than 10,000 residential lots and over 550ha of industrial land.
Industry sources said the sale of the Investa Land business is not as straight forward as the CIC transaction, because the business is unusual in that it combines industrial and residential, which makes it unlikely that one player will buy Investa Land as a standalone asset.
Morgan Stanley never split Investa Land into separate industrial and residential businesses after its privatisation of Investa Property Group in a $4.7 billion takeover in 2007, despite carving up the residential builder business Clarendon Group and selling it back to the founder Peter Campbell in 2012.
Australian Property Journal
