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CIC acquires Investa Property Trust for A$2.45bn

In one of the biggest ever property transactions in Australia, CIC has acquired Morgan Stanley Real Estate Investing’s prime office portfolio the Investa Property Trust.

Morgan Stanley Real Estate Investing (MSREI) has sold the Investa Property Trust, the central business district assets of its Australian property company Investa Property Group (IPT), to Chinese sovereign wealth fund the China Investment Corporation (CIC).

The real estate unit of the New York-headquartered investment bank said in a statement that it has exchanged contracts to sell its holding to CIC International, the sovereign wealth fund’s subsidiary for overseas investments for an undisclosed sum. PERE has learned that the portfolio has been sold for around A$2.45 billion (€1.61 billion; $1.78 billion), making it one of the biggest real estate transactions in Australia to date.

According to a report in the Australian Financial Review, the acquisition reflected an initial yield of 5 percent.

With the sale, MSREI has partly completed the highly anticipated exit from the reportedly $8.9 billion Investa Property Group’s business, which it acquired for A$6.6 billion before the global financial crises.

The Investa Property Group has two divisions – Investa Office division and Investa Land. Investa Office includes the IPT, and the office platform called Investa Office Management Holdings (IOMH). The platform provides services for the listed Investa Office Fund, which according to the company website has $3.1 billion in assets under management and in which MSREI has a minority stake; the Investa Commercial Property Fund, with $2.4 billion in AUM; and the balance sheet assets under IPT.

The IPT consists of a portfolio of nine directly held premium and Grade-A office towers. Some of the flagship assets include interests in 126 Phillip Street in Sydney and 120 Collins Street in Melbourne.

As part of the deal, CIC has also entered into an investment management agreement with IOMH, allowing IOMH to continue management services of the IPT portfolio.

IOMH provides asset and property management services to over A$8.9 billion of commercial office assets. The platform includes fund management, portfolio and asset management functions.

The sale process for the remaining portion of Investa Office after the IPT sale, and Investa Land will continue to progress, MSREI said in the statement. The sale process for the platform officially commenced in February this year.

Clayton Utz was the legal adviser to CIC International for the deal. For MSREI, Morgan Stanley and the Swiss investment bank UBS are its financial advisers for the entire sales process while Allens is its legal adviser.