Blackstone buys half of 60 Margaret Street for $420m

Su-Lin Tan|Apr 17, 2019

US private equity giant Blackstone has snapped up Hong Kong investment management firm PAG’s half-share of the A-grade tower at 60 Margaret Street in the Sydney CBD for $420 million.

It is understood the acquisition was executed by an affiliate of Blackstone Real Estate Asia.

The other half-owner of the building, Mirvac – which once occupied the property before moving to the EY building it developed in 200 George Street – had a pre-emptive right on the half-stake that was sold to Blackstone but did not exercise it.

Instead it participated in the transaction through the issue of a $63 million junior debt funding to Blackstone.

The deal was struck at a commercial interest rate.

The ASX-listed diversified property group will also provide investment and property management services as part of the transaction.

Its half-stake in the tower sits at $280.6 million on its books, while the retail centre at the base of the tower, MetCentre, is booked at $80.8 million.

However, the most recent external valuations for Mirvac’s stake were conducted in 2016 and the market has moved higher since.

The company said the impact of the new Blackstone transaction on the book value of its share would be assessed as part of the group’s revaluation process at the half-year reporting period for December 31.

PAG acquired its half-share interest in 60 Margaret Street in 2015 from superannuation fund MTAA Super for just over $300 million.

The 36-level office tower, which counts ING as a tenant, sits atop the two-level MetCentre, which offers a Woolworths supermarket as well as 80 shops.

The 39,560-square-metre tower and centre were developed in 1980 and MetCentre has been progressively refurbished.

On a high-traffic corner of George and Margaret streets, the property benefits from being opposite Wynyard train station, which is also undergoing an overhaul.

Brookfield Property Partners is building a brand-new commercial precinct over Wynyard station, Wynyard Place, including the 27-level 59,000 sq m office tower to be known as 10 Carrington Street.

Other developments include the restoration of historic office buildings at Shell House and 285 George Street to create another 9400 sq m of boutique office space.

The retail space, in George Street, within the station concourse, and across the Carrington Street frontage, will total 7000 sq m.

PAG’s sale to Blackstone was handled by Savills’ Ian Hetherington, Ben Azar and Tim Grossman.