BlackRock confirms Zenith and targets Australian property expansion

BlackRock and Centuria Property Funds have completed the purchase of a Sydney office tower for AUD279m (€190m).

In its first venture with Sydney-based Centuria, global asset manager BlackRock will own 50% of Zenith Centre, located in Chatswood on Sydney’s north shore, on behalf of a private fund it manages.

Industry sources told IPE Real Estate that Australia’s CBRE Capital Advisors, the services arm of CBRE, would provide debt funding for BlackRock’s share of almost the AUD140m.

With its 50% stake, Centuria has created its single largest property trust within its range or funds for high-net-worth individuals and family offices.

Jason Huljich, Centuria’s CEO for unlisted property funds, told IPE Real Estate that the capital raising is going well, and he expects it will soon close fully subscribed.

Huljich said the deal is Centuria’ second partnership with an international group.

Its first was as a partner with German fund manager SEB, since bought by Savills Investment Management. In that partnership, Centuria and SEB in 2013 bought the Channel Seven Building in Australia Technology Park, in inner Sydney, for AUD$240m in two tranches.

“We have also been approached by offshore groups interested in partnering with an active management team to source assets,” Huljich said.

BlackRock, the world’s biggest fund manager, with about $US4.6trn (€4.14trn) of assets under management, is one such group.

It is reportedly seeking to build a multi-billion-dollar property funds management platform in Australia.

BlackRock inherited property assets in Australia through its purchase in 2013 of MGPA, the Singapore-based Australian-founded real estate private equity firm.

MGPA had bought Australian assets for two of its funds, now known as BlackRock Asia Fund III and BlackRock Asien Spezialfonds, which caters to medium-sized German pension funds and insurance companies.

Soon after the change of control to BlackRock, the local Australian real estate team, led by Hamish MacDonald, said in an interview that BlackRock was targeting high-yielding assets in Australia.

MacDonald said then that the firm’s real estate strategy was typically “buy, fix and sell”.

Its latest acquisition, Zenith Centre, is a well-maintained building, regarded as one of the quality buildings on the North Shore, with 95% occupancy.

The new owners will spend AUD30m to freshen up the building that is set to benefit from improved transportation links to the rest of Sydney, said Huljich.

In a brief statement in response to IPE Real Estate’s request for comment, MacDonald, director of BlackRock Real Estate in Australia, said: “We look forward to adding value to this property to meet the needs of current and future tenants, while continuing to seek similar opportunities across the market.”

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