The Blackstone Group is on the cusp of acquiring a seven-strong office portfolio in Australia from GE Capital Real Estate, the real estate arm of General Electric, the US conglomerate.
The firm is to buy B-class buildings in Perth, Melbourne and Sydney in a deal valued at approximately A$300 million (€201 million; $267 million).
When completed, the purchase by Blackstone brings the total amount of real estate acquired by the New York firm in Australia past the $2.5 billion since it purchased Sydney-based real estate investment manager Valad Property Group in 2011.
That deal inherited Blackstone a team that specialises in adding value to B-grade office buildings and it is anticipated that Valad staff will work on doing likewise with the portfolio acquired from GE Capital.
The portfolio is the second capital outlay made in Australia by Blackstone on behalf of its maiden Asia opportunity fund, Blackstone Real Estate Partners Asia, for which it is in capital raising mode and is hoping to haul $4 billion. A first closing captured the first $1.5 billion. The first happened last month with purchase of Greensborough Plaza, a large retail mall in Melbourne, which it purchased for A$360 million from Australian developer and fund manager Lend Lease.
While Blackstone has been investing in Asia since 2006 it previously invested on behalf of its main Blackstone Real Estate Partners opportunity funds which have a global mandate but have a limit on the amount of equity able to be deployed outside of the US. Since the introduction of the Asia fund deals in the region are 80 percent capitalised by BREP Asia and 20 percent by the BREP series, currently in its seventh iteration.
For GE Capital Real Estate, the sale is part of a wider switch of focus from equity real estate investments to real estate financing. To that end, it has provided Blackstone with vendor finance to the tune of approximately 70 percent loan to value to buy the portfolio. GE Capital also provided vendor finance to similar extents in previous portfolio sales to Hong Kong-based Pacific Alliance Group and its Japan-focused company Secured Capital and to Australian firm Mirvac Group.
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