Grosvenor Place deal hangs in the Balance

The China Investment Corporation is reported to be backing out of its plan to acquire a 50% interest in Grosvenor Place from Dexus & the Dexus Office Partnership with CPBIB.

Dexus reported in November last year that it had entered into conditional agreements to sell the stake to CIC for a net price of $925m. The sale was the subject to FIRB approval, with settlement expected in early 2021.

FIRB approval was understood to have been granted in June 2021 with the expected settlement then pushed out to July 2021, however nothing has eventuated.

Dexus’ annual report released in August confirmed that the transaction was expected to settle in FY22 but did not provide any further guidance on the sale or the position of CIC in the matter.

Dexus have not made any comments on the recent speculation, however pressure is mounting given the size of the deal.

CIC hold an existing 25% stake in the tower in a position that was managed by Mirvac, and funds manager Arcadia. The remaining 25% of the building is owned by the Commonwealth Superannuation Corporation

Sources suggest that the deal will now likely proceed with Blackstone who are set to take up the 50% interest from Dexus and the 25% interest from CIC.

Dexus are now doubt holding CIC’s to its contractual position and are reported to have two alternative offers ready to step in. Of course, alternative offers could be then subject to pre-emptives from the other co-owners, which are unlikely to be taken up, but complicate the process.

If Blackstone are hoping to step in at an opportunistic value, it is likely that CIC will have to discount it’s 25% position to accommodate them as opposed to Dexus who are standing firm on what is a top price for the asset.

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About Warwick Petschack

Warwick has over 25 years of property investment and management experience. Principally responsible as Managing Director for Capital Management Australia and Joint Managing Director for Chauvel Capital Partners and Editor of Australian Property Markets News.

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