New York-based private equity real estate firms The Blackstone Group and Morgan Stanley Real Estate Investing have sold an outlet mall in Melbourne to an offshore private investor in a near A$125 million (€84.10 million; $92.13 million) deal. PERE understands the deal reflected an exit cap rate of 5.2 percent.
The Spencer Outlet Centre is a 247,569 square feet shopping center located in the Melbourne central business district area. The center is now understood to be fully leased: Coles, an Australian supermarket chain, is the anchor tenant on the ground floor, with five mini retailers and 99 other specialty shops occupying the main outlet mall.
McVay Real Estate is understood to have advised the two firms on the sale.
The asset was part of the British bank Lloyd’s $1.2 billion portfolio of troubled Australian real estate loans, which Blackstone and Morgan Stanley acquired via a joint partnership in 2012. The retail center, one of the larger assets in the portfolio, reportedly went into receivership in 2011 after the developer was left with a piling debt.
The firms jointly purchased the portfolio for A$620 million. Blackstone acquired its share via the $13.3 billion Blackstone Real Estate Partners (BREP) VII, one of its record global opportunistic real estate vehicles raised in 2012, and Morgan Stanley via its Morgan Stanley Real Estate Fund (MSREF) VII Global, which closed on $4.7 billion in 2010.
The pair then went on to overhaul and stabilize the retail asset, which reportedly had vacancy rate of almost 30 percent back in 2012.