China’s CIC Abandons US$674m Purchase Of Half Stake In Sydney Office Bldg
AUSTRALIA – China Investment Corporation (CIC) is walking away from its deal to acquire an additional 50 percent stake in the Grosvenor Place office tower in central Sydney, reported Mingtiandi on Monday (8 November, SGT).
In November 2020, China’s sovereign wealth fund agreed to buy a half-stake in the 44-storey office building for A$925 million ($674 million) via 2 separate deals: a 25 percent interest will be acquired from Dexus office partnership fund, while another quarter stake will be picked from Australia real estate investment trust (REIT), Dexus.
In July this year, the media reported that Australia’s Foreign Investment Review Board (FIRB) has given the go signal to CIC’s acquisition, despite rising tensions between Australia and China over trade and foreign affairs. However, 2 local sources privy to the transaction confirmed to Mingtiandi last week that China’s sovereign wealth fund no longer intends to proceed with the purchase.
Nonetheless, the Australian Financial Review reported that Blackstone has agreed to replace CIC and acquire the stake at the same price. The US private equity giant could also potentially buy the 25 percent stake already held by China’s sovereign wealth fund. The remaining 25 percent stake is owned by the Commonwealth Superannuation Corporation.
CIC’s scrapping of a deal to secure a larger slice of Grosvenor Place expunges what would have been the country’s biggest commercial real estate deal of the year. Previously, China Investment Corporation bought its existing 25 percent stake in the 33-year-old tower when it bought Morgan Stanley’s Investa office portfolio for A$2.5 billion in 2015.
Despite CIC’s abandonment of the Grosvenor Place transaction, Sydney’s office investment market has recorded an uptick in activity as COVID-19 measures are relaxed.
Just this week, Australia’s Investa and Canada’s Oxford Properties agreed to let Japanese real estate giant Mitsubishi Estate enter into their joint venture (JV) to develop an upscale office tower linked to Sydney’s upcoming Pitt Street metro station.
Dubbed as Parkline Place, the 39-storey mixed-use development is expected to be completed by 2024. It will come with 47,800 sq m of office space and 1,290 sq m of retail space.