Funds lead interest in BlackRock office assets

PRIVATE property syndicates and small- to medium-sized

PRIVATE property syndicates and small- to medium-sized superannuation funds are in the process of due diligence over more than $300 million worth of prime national office assets being sold by the private equity group BlackRock.

The sales campaign for the assets closed last Friday and prospective buyers have 20 days to register an offer.

The outlook for the office market is improving, albeit at a slow pace. Leasing has also shown signs of life, with several deals being signed this year.

The office portfolio includes

10 Barrack Street, 166 Epping Road and 107 Pitt Street, all in Sydney 555 Lonsdale Street, Melbourne, and the Austar building at Robina on the Gold Coast.

The 10 Barrack Street property is valued at $60 million, and is believed to appeal to funds such as Abacus Funds Management and CorVal, among others.

In Melbourne, the 13-storey 555 Londsale Street property is valued about $65 million. Listed and wholesale funds are said to have put in offers, considering the property's proximity to the city's financial and legal businesses.

BlackRock has already raised $115 million through the sale of its industrial assets to Goodman Group. The group signalled in September that it was selling its $488 million Australian property portfolio, covering assets from Townsville to Perth. The funds raised will be used within other parts of the BlackRock business.

The selling agents for the Sydney CBD offices were Jones Lang LaSalle and Colliers International. Jones Lang LaSalle and Hartigan Bolt were the agents for the Epping Road property.

The demand was encouraging, with the buyers mainly comprising local super funds, private investors and syndicates. Real estate investment trusts and Asian investors were thought to be less involved in the campaign.

Details are also set to be finalised in the coming week for the sale of the $200 million Eclipse tower at 20 Station Street, Parramatta, to the REST Industry Super fund.

The building is owned and developed by Leighton Properties and Grosvenor Funds Management. It will be completed later this year and is already 80 per cent leased.

REST is among the largest super funds by membership, with more than 1.9 million members and more than $20 billion under management.

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