Blackstone ponders joining Mirvac in tilt for Investa

New York-based private equity firm Blackstone is considering partnering with Mirvac Group for a joint tilt at the $8.9 billion Investa Property Group.

Blackstone and Mirvac had recently held tentative discussions about a joint venture, which would see the listed domestic trust taking control of the management rights to Investa’s sprawling real estate platform, sources said.

The talks come at a late stage in the sales process, which was ­officially launched in February as Morgan Stanley finally opted to offload the property group it bought at the peak of the last credit bubble.

The investment bank, and its advisers UBS, have whittled down a field of more than 50 suitors to half a dozen, in one of the most competitive auctions witnessed in Australia’s real estate sector.

It is understood Morgan Stanley’s preference right from the outset has been to sell the Investa portfolio, excluding the land division, in one line.

Blackstone remains one of the leading contenders for the property empire. However, the private equity group would prefer to own just the $2.5bn balance sheet ­assets, including stakes in many of Australia’s best known towers like Sydney’s Deutsche Bank Place, and may draft in Mirvac to take charge of the management rights.

The two parties have discussed this possibility and sources yesterday confirmed Mirvac’s appetite for the rights to the platform. The pair are close. Blackstone last year bought an $826 million portfolio, including a half stake in Sydney office building Westpac Place, from Mirvac in its largest direct local property deal.

In the latest play, Mirvac has already taken a turn around the Investa data room and is precluded from re-entering the race. The A-REIT wanted to purchase the management rights and so its new tilt is likely to hinge upon Blackstone’s ability to buy the entire Investa business.

Also among the top bidders to buy Morgan Stanley Real Estate’s Investa Property platform is Canadian giant Brookfield and the listed Cromwell Property Group, which is keen to acquire the management platform and has the backing of Redefine Properties, a listed South African real estate giant.

Another bidder, Dexus Property Group, is backed by Middle Eastern sovereign fund Abu Dhabi Investment Authority. China Investment Corporation, potentially part of the La Salle Investment consortium, is also ­shaping as a key bidder.

“There’s lots of jockeying. It will be a process of elimination between now and the beginning of July,” sources close to the deal told The Australian yesterday.

Meanwhile, the portfolio’s management rights, which were effectively rejected by the listed Investa Office Fund at a price of $135m earlier this year, are now said to be attracting bids of more than $200m.

This time around, the management rights are expected to sell for a hefty $235m.

This article first appeared in The Australian Business Review