Blackstone set to sell stake in landmark Sydney office tower Grosvenor Place

Grosvenor Place in George St sits on a major site adjoining Circular Quay, in the northern part of the Sydney.

One of Sydney’s landmark office buildings, Grosvenor Place, is in play with US owner Blackstone exploring an exit from its 75 per cent stake.

The private equity and property group, which famously swooped on an interest in the $1.8bn tower in Sydney CBD in an opportunistic deal in 2021, is believed to be negotiating a deal with office heavyweight Investa.

Under the scheme, which is at an early stage, Investa would set up a club of investors to acquire Blackstone’s interest in the landmark tower.

The local platform, which is part-owned by Oxford Properties, has been quietly looking to tap investors in Asia to back a potential move on the complex, with the promise of adding value as demand for office space recovers at a time when few new towers are being built.

While the parties have declined to comment, the play would be in keeping with Blackstone’s model of buying, fixing and selling properties, as well as with Investa’s focus on prime towers and its ability to integrate it with its existing business and complete the leasing up of the tower.

The foyer of Grosvenor Place. Picture: Toby Zerna

Blackstone’s exit has been on the cards since the time it bought into the landmark tower in 2021, when Chinese sovereign wealth fund China Investment Corporation pulled back from a planned deal to buy a 50 per cent interest from Dexus and Canadian pension fund partner CPP Investment Board.

When that deal did not go ahead amid uncertainty in both the office market and as political tensions with China were heightened, Blackstone effectively stepped into the Chinese fund’s shoes. It also acquired another 25 per cent from CIC which had been overseen by Mirvac.

The remaining 25 per cent of the building is owned by the Commonwealth Superannuation Corporation and it has already benefited from the healthier office market.

Buying Blackstone’s substantial stake would see Investa partner on the building with the CSC, giving it a bigger part of Sydney’s premium office market and allow it to bring it smarts into capitalising on the recovery of the office market.

Blackstone has already undertaken a significant turnaround job on Grosvenor Place, leasing up space that was left when Deloitte departed for Quay Quarter Tower.

The move also shows where the action is in the office market with a concentration on top end transactions rather than lower grade stock.

For Investa, exploring the transaction is part of its model of expanding its funds management and mandates business beyond its traditional wholesale offers fund, which is already one of the top performing vehicles in the country.

Investors are looking to form larger small clubs of like-minded institutions that are able to move quickly and seize control of large assets, which would fit well with the Grosvenor structure.

The George St skyscraper sits on a major site adjoining Circular Quay, in the northern part of the Sydney CBD, and the complex has 44 levels of prime office space.

The design of the landmark tower by Harry Seidler, which was completed in 1987, incorporates environmentally conscious features long before sustainability became a widespread concern. It has a Carbon Neutral certification and a 6.0-star NABERS Waste rating.

Investa has been growing its office platform by taking on more mandates and helping foreign investors into the market. Last November, it aided global investment manager BGO as it bought 10-20 Bond St from joint owners Mirvac and Morgan Stanley Real ­Estate Investing, and it is now investment manager.

The group, led by Peter Menegazzo, was an early mover in the office cycle recovery and last year took full control of another tower – 388 George St – in a $460m deal alongside Singapore-listed Singapore Land and UOL Group.