Starwood Capital acquires Sydney office towers from Centuria, BlackRock

Starwood Capital, one of the biggest real estate managers in the world, and its Australian partner Arrow Capital Partners have acquired the Zenith office complex, an iconic A-Grade office complex in Sydney, from property fund manager Centuria Property Funds and BlackRock.

The release issued by Starwood Capital did not provide financial details of the acquisition but a report by IPE said the joint venture acquired the suburban Sydney office complex for A$438 million ($306 million).

The Zenith is an iconic A-Grade office complex comprising twin 21-level towers and basement parking. The property is located in the heart of Sydney’s North Shore office market, approximately 12 km North of Sydney central business district.

Centuria Property Funds and a vehicle managed by BlackRock purchased the property in 2016 in a A$279 million ($194.5 million) deal.

Centuria’s 50 per cent share of The Zenith is owned by investors in the single-asset, unlisted Centuria Zenith Fund. The fund will be wound up and proceeds will be distributed to investors after the sale settles.

Centuria and BlackRock had done a major refurbishment programme aimed at transforming the metro office tower into a premier workplace destination. Since the acquisition in 2016, they have closed 58 leasing deals to take the occupancy to 100 per cent and increase the weighted average lease expiry from 2.5 to 4.3 years.

According to Jason Huljich, Centuria’s head of real estate and funds management, income returns from the Centuria Zenith Fund have been excellent, on average 7.7 per cent per annum.

Starwood Capital Group vice president James Fogarty said, the acquisition is part of the firm’s targeted investment strategy in Australia, an economy he believes is underpinned by strong fundamentals that drive further strength in the Greater Sydney office market.

“We like the North Shore office market, and Chatswood in particular given the limited supply, robust demand and transformative infrastructure improvements that are underway,” he said.

The Zenith in Chatswood is the second Sydney acquisition by Arrow Capital Partners and Starwood.

“We intend to inject further capital and asset management expertise to enhance the offering to our tenants and ensure that the Zenith remains the standout office asset in the Chatswood office market,” said Kurt Wilkinson, Partner at Arrow Capital Partners.

Recently, Sydney-based real estate firm LOGOS and Swiss private equity firm Partners Group announced today that they have completed the final sale of an industrial site in Yennora, west of Sydney, for $49 million.

The final sale, which involved 8.8-hectare lot with improvement, yielded a total of $129 million since the first sale in 2016, a joint statement said.