Blackstone could fetch $1bn as it looks to sell Sydney’s JPMorgan tower

The famed private equity house believes that the top end of the office market will hold up against looming headwinds as it lists the Sydney headquarters of JPMorgan.

Blackstone is selling 85 Castlereagh Street in Sydney, which could fetch $1bn.

US private equity giant Blackstone is kicking off the year with a marquee property offering – the JPMorgan headquarters in the heart of the Sydney CBD – that could sell for about $1bn.

The move is a sign of its confidence that big investors will still chase prime towers even as the market is being repriced globally.

Large institutions have been tempering their holdings in offices as work from home takes on a more permanent presence, but a combination of the pandemic ending and recessionary conditions are bringing staff back into offices.

The top echelon is also being chased by global investment ­houses, keen to lock in top tenants that will be certain to pay rent ­during tougher times.

Real estate agencies JLL and CBRE are handling the offer, but they and the vendor declined to comment.

Blackstone is moving after the bulge bracket investment bank resigned to the building, providing certainty of income that will see it through the storm.

Blackstone picked up the building, which is one of three towers above and around Westfield Sydney, as part of a mega deal worth $1.52bn in 2019. That marked one of the city’s largest-ever property purchases and Blackstone is poised to make a profitable exit even as the market turns.

Scentre, the owner of Westfield shopping centres across Australasia, ran an off-market process to sell the trio of towers to Blackstone.

The US firm has since sold off two smaller buildings, including selling the 100 Market St office building in Sydney to Hong Kong’s LINK REIT for $683m, and, separately, a smaller tower at 77 Castlereagh St, to Abacus Property Group for $250m.

The building is the first time a Sydney premium-grade tower has been offered since Aurora Place sold to a Korean pension fund after the global financial crisis in 2009.

Much of the premium end of Sydney’s office market is tied up by partial stakes, which then get taken up by co-owners under preemptive deals.

Sydney’s office market has already been effectively repriced with Mirvac and Blackstone in talks to sell the tower at 60 Margaret St to finance house Ashe Morgan for about $830m.

That deal involves some potential for repositioning whereas the JPMorgan building is considered a core holding.

The sales will see Blackstone ­effectively recycle the capital into new opportunities and it has a big roster in Australia, Including build to rent projects and logistics.

Relatively few other large buildings are on the block. Chinese company Ping An Real Estate is weighing a sale of its half stake in the $2.4bn Sydney Place development at the city’s Circular Quay.

The offshore group, advised by real estate agencies Cushman & Wakefield and Savills, has ridden the office cycle and is also betting that the prime end of the market will hold up. Dexus is also selling two CBD assets and others are ­expected to follow suit if the assets gain traction.