Morgan Stanley is set to sell its Australian office properties to China Investment Corp (CIC), China's sovereign wealth fund.
The office properties are under Morgan Stanley's Australian real estate unit, Investa Property Trust (IPT), which owns nine office buildings located in major cities in the country, reports GlobeSt.com. The acquisition marks the first entry of CIC into the Australian real estate market. The Chinese firm outbid more than 20 competitors which includes DEXUS Property Group and its partner, the Abu Dhabi Investment Authority, Brookfield Asset Management Inc. and Blackstone Group LP.
According to the Australian Financial Review (AFR), the deal was agreed by both parties early Monday morning, July 27. CIC reportedly made a $2.45 billion bid for the Investa office properties, making it the biggest direct real estate transaction in Australia's history. The IPT properties includes premium office buildings located in 120 Collins Street in Melbourne and 126 Phillip Street in Sydney. Morgan Stanley is said to retain management of the IPT portfolio, as indicated in the statement released Monday: "As part of its acquisition of IPT, CIC International will enter into an investment management agreement with Investa Office ("IOMH"), thereby ensuring continuity of management services for the portfolio."
The AFR report further mentioned that CIC's acquisition of IPT properties is just part of the Australian real estate arm that Morgan Stanley has put on sale. The transaction started in February 2015 and a big chunk of the Investa group is still up for grabs. In the statement released Monday, Morgan Stanley stated that it "continues to progress the sale process for Investa Office." Currently, negotiations are still in progress between Morgan Stanley and the two final bidders for the Investa group. These are the LaSalle Investment Management and Mirvac Group.
Meanwhile, the CIC and Morgan Stanley deal is still subject to the approval of Australia's foreign investment board.
