Oxford Properties has become the preferred party to jointly invest with developer Grocon in the AUD1.4bn (€891m) commercial office component of a Sydney waterfront project.

Following a four-month process to find an investor, Grocon has confirmed that the global real estate arm of the Ontario Municipal Employees Retirement System (OMERS) will be its partner in Central Barangaroo, part of a large urban regeneration scheme in central Sydney.

Oxford Properties, working with US-based fund manager, Hines, edged ahead of competitors, including Charter Hall Group, which was reportedly bidding together with another Canadian group and Japan’s Mitsui Sumitomo.

Claire McIntyre, vice president of Oxford Properties Group, told IPE Real Assets: “I can confirm that Oxford is in advanced discussions with Grocon in relation to the Central Barangaroo project.”

She said no further comment would be made at this stage.

The Central Barangaroo office acquisition would represent Oxford’s entry into the Australian market.

Grocon has been widely reported to be under pressure to find an investor/partner for Central Barangaroo because a high-interest loan provided by non-bank lender, MaxCap, is maturing shortly.

“Consistent with Grocon’s stated long-term financial strategy, the existing debt facility agreement with MaxCap will be retired with the conclusion of this transaction,” the company said in its statement.

Grocon, Chinese-owned Aqualand, and Australia’s Scentre Group, a listed shopping centre REIT, won rights from the NSW Government in January to develop Central Barangaroo.

The overall value of the mixed-use project, which provides for commercial, retail, residential, cultural and public facilities, is said to be more than AUD5bn.

Financial close for the Grocon/Oxford Properties transaction is expected in July and is subject to customary closing conditions, including board and regulatory approvals.

OMERS itself is already a significant investor in Australia as part of the Lonsdale Consortium, which includes Australia’s Future Fund, QIC and Global Infrastructure Partners.

In 2016, the consortium secured a 50-year lease for AUD9.67bn from the Victorian government to run the Port of Melbourne.

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