Starwood Capital and its Australian partner, Arrow Capital Partners, have acquired a suburban Sydney office complex for A$438m (€271m) from BlackRock and its Australian co-investor Centuria Property Funds.

The acquisition of the Zenith Centre will be Starwood Capital’s single largest transaction in Australia to date and second joint venture with Arrow Capital.

Starwood Capital is the majority partner in the deal, and Arrow Capital is the local asset management partner.

The Centuria unlisted fund and BlackRock acquired the Zenith Centre for A$279m between them when both Dexus and the GPT Wholesale Office Fund sold their respective half stake in the property in May 2016.

Centuria and BlackRock said whilst it was originally intended that the property be held over a longer period, buyer interest in the property resulted in an acceleration of the exit.

Kurt Wilkinson, partner at Arrow Capital Partner, told IPE Real Assets the transaction was done at a 6.5% yield.

“These are A-plus buildings on a land-rich site. It has 8,000sqm of landholding,’ he said. “The area has a lot of potential as new Metro train service has further strengthened Chatswood as an employment hub.”

Of the two towers, he said one had a 6.5-year average lease expiry, but the second tower had a two-year average weighted average lease expiry.

“With asset management expertise, we would able to benefit from re-leasing of the tower,” he said, adding that there would also be potential for future capital investment on the site.

Starwood Capital Group vice president James Fogarty said: “We like the North Shore office market, and Chatswood in particular given the limited supply, robust demand and transformative infrastructural improvements that are underway.

“The Zenith Centre is a landmark within the Chatswood market and has strong appeal to tenants across a range of sectors and provides high-quality space.”

Jason Huljich, Centuria’s head of real estate and funds management said the sale price was an outstanding result, reflecting the general strength of the market and Centuria and BlackRock’s asset management strategy in enhancing the yield on the property.