Singapore's ARA Asset Management is poised to acquire a prized Pitt Street tower that is partly owned by one of the richest young men in the world, the 7th Duke of Westminister.
If the deal is finalised as expected, the Singaporean fund manager will take out the tower for around $275 million at a cap rate of somewhere between 6 per cent and 6.5 per cent.
Locally listed platform Propertylink, alongside Goldman Sachs and the Duke of Westminster, put the tower at 320 Pitt Street on the market in February.
Propertylink purchased the landmark asset for $200 million and last valued it at $245 million before appointing JLL's Rob Sewell and Paul Noonan to broker it this year.
The property has an average lease expiry of around three years, with Telstra as the main tenant.
Aside from its merits as an investment in Sydney's hot commercial market, it is the property's links to English nobility, in the shape of the duke, Hugh Richard Louis Grosvenor, that have raised the Pitt Street tower's profile.
The duke became the richest man on Earth under the age of 30 after his father Gerald died last year of a heart attack at the age of 64.
His inheritance included 53,863 hectares of the British Isles, with properties in the posh parts of London, Mayfair and Belgravia.
Among the assets are suburban office buildings in North Ryde and a stake in the Pitt Street tower through the duke's private company, Grosvenor, named after the well-known Mayfair street.
Now in due diligence on the property is ARA, which runs a series of listed and unlisted funds out of Singapore and has assets under management of about $34 billion.
The Australian arm of ARA has been building its platform steadily in recent years and will have amassed close to $2 billion under management if the Pitt Street deal is completed.
The Singaporean manager was responsible for the biggest deal in the Melbourne market last year when it acquired the Southgate complex in Melbourne from Dexus Property Group for $578 million.
For that transaction, ARA brought in two funds it manages as investors: the listed Suntec REIT and Peninsula Investment Partners, which holds Korean sovereign wealth capital.It was ARA-run Suntec that bought into a Leighton Properties office development at 177 Pacific Highway in North Sydney in late 2013, in a $414 million deal.
