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Blackstone commits A$826m to Australian properties

The New York-based real estate and private equity giant has purchased a 50% stake in Sydney’s Westpac Place from Mirvac and is likely to exercise options to buy positions in another seven assets from the Australia-listed property company.

New York-based real estate and private equity giant Blackstone has purchased a half-share in Westpac Place, a large office in Sydney for A$435 million (€290 million; $404 million), according to statement.

Blackstone acquired the stake from Australia-listed developer and manager Mirvac, which will continue to own the other half of the assets once Blackstone has completed the deal. The acquisition the 840,000 square foot office at 275 Kent Street reflects an initial yield of 6.65 percent.

The office is fully-occupied by Australia’s second largest bank Westpac until 2018 after which Blackstone and Mirvac intend to reposition it to make it more attractive to either Westpac should it resign for another term, or another tenant.

“We believe 275 Kent Street represents a unique opportunity to invest in a high quality, strategically located building in the Sydney CBD, as well as partner with a terrific organization in Mirvac,” Blackstone’s head of Asian real estate Chris Heady said in the statement. “This transaction also underscores our long term commitment to investing in the Australian real estate market.”

Blackstone also has the option to acquire seven other assets across Australia from Mirvac. If it exercised its options, which it is expected to do, it would invest a further A$391 million.

The capital for these deals would come from Blackstone’s first opportunistic real estate fund dedicated to deals in Asia, Blackstone Real Estate Partners Asia. The vehicle has attracted $3.5 billion from investors so far. It has a target of $4 billion but a hard cap of $5 billion. 

Once the deal with Mirvac is complete, it is understood that the firm will have committed $1 billion of equity from the Asia fund already, or 25 percent of its $4 billion target. The firm would also have grown its Australian portfolio of properties to $3.5 billion in value.