Blackstone Scoops Up Office Towers in the Sydney CBD for 1.5b

One of Sydney’s largest ever commercial property purchase was closed as Scentre Group offloaded its office towers above Westfield Sydney to US private equity giant Blackstone. The $1.52 billion deal will fund the group’s buyback program including the $800 million worth of company securities.

Properties involved in the transaction are spaces located above and around the CBD Westfield complex at 100 Market Street, and 77 and 85 Castlereagh Street. Blackstone acquired the assets through a 299-year leasehold interest. The sale represents a premium to book value in excess of 10 per cent. Particularly, the landmark office building at 85 Castlereagh Street is the main property for the deal.

Scentre Group will still hold the ownership for the Westfield Sydney and Sydney Tower. The group faces the challenge of boosting its share market performance. Their stock price declined 9.5 per cent over the last 12 months. The dropping off resulted from the decline of consumer demand because of the expanding business on online shopping.

The buyback program, which is expected to be launched by August, aims to increase its return to equity while maintaining a strong balance sheet. Scentre Group has now released $2.1 billion in capital to pursue strategic objectives. Last month, the retail landlord also sold a half stake in Westfield Burwood for $575 million.

On the other hand, the forecast distribution for 2019 remains unchanged at 22.60 cents per security.

Article and image sources: https://www.afr.com/real-estate/commercial/investment/scentre-offloads-office-towers-to-blackstone-for-1-5b-20190627-p521vw ; https://theurbandeveloper.com/articles/scentre-sells-sydney-cbd-office-towers-in-152bn-move

Ray White’s top 10 listings for July: (Click on the address to view listing)

Part Level 27/264 George Street SYDNEY

Suite 501/60 Pitt Street SYDNEY

Part Level 4/15 Lime Street SYDNEY

Suite 1003/50 Pitt Street SYDNEY

Level 1/26 Sussex Street SYDNEY

Part level 1/71 York Street SYDNEY

Level 4/447 Kent Street SYDNEY

Level 11/97-99 Bathurst Street SYDNEY

Suite 1101/37 York Street SYDNEY

Part level 27/1 Farrer Place SYDNEY