The Blackstone Group, which has the largest private equity real estate platform in the world in terms of capital under management, is poised to invest some of its ample resources into a large but historically troubled shopping mall in Sydney.
According to multiple reports in the Australian national press, the New York firm is set to acquire for A$341 million (€277.6 million; $354.2 million) the Top Ryde shopping centre, an 839,592 square foot property, from receivers McGrath Nicol which is acting on behalf of its lenders. The deal is understood to be reflecting a capitalisation rate of 7.5 percent.
The lenders which originally bankrolled Top Ryde’s former owner, the Australian property entrepreneur John Beville, for the asset to the tune of A$650 million, appointed McGrath Nicol in February last year after several failed attempts to sell the asset.
Blackstone, which is investing using equity from its record-size, opportunity fund Blackstone Real Estate Partners VII, which corralled $13.3 billion of commitments from institutional investors and closed in October, will now try to turn Top Ryde into a profitable asset. It was once value at A$800 million, but that was four years ago.
According to Australian Financial Review, the asset was subject to unrealistic forecasts regarding its ability to attract top retailers and Beville found himself forced into offering cash incentives to attract cautious tenants wary of expanding during the onset of the global financial crisis.
According to AFR, rivals bids came from groups including a consortium between Lend Lease and Goldman Sachs, the latter of which has become one of the property’s lenders. ISPT, the unlisted Australian fund, and Colonial First State, the fund manager, are also thought to have tabled offers.
Blackstone’s investment comes at a time when many commercial property landlords are rationalising or repositioning their property holdings and at a time of distressed for others. The deal comes shortly after Sydney-based fund manager AMP Capital led a club of large institutional investors comprising the Canada Pension Plan Investment Board and United Arab Emirates sovereign wealth fund Abu Dhabi Investment Authority in the acquisition of large interests in Sydney mall Macquarie Centre and Pacific Fair on the Gold Coast – each investor committing A$436 million to a tailor made investing vehicle.