PROPERTY scion Daniel Grollo has won the backing of international banking heavyweight Citibank for his entry into the US property market.
The bank will back his purchase of the near US$800 million ($900m) Park Avenue Tower in Midtown Manhattan that will enable him to realise a long-held ambition to develop a US property funds management operation.
Mr Grollo has split his time between Melbourne and New York for some years for family reasons but has also been keen to expand the business internationally.
Grocon has agreed to take a 95 per cent stake in the trophy tower from private US group Shorenstein Properties for $US775m.
A 5 per cent stake in the Park Avenue Tower will be kept by US mogul George Klein, whose Park Tower Realty developed the 35-storey building in 1986, for tax reasons. The tower was originally designed for IBM and is now occupied by global law firm Paul Hastings.
The law firm is spread across 16 floors and its lease expires in 2016 but New York’s leasing market has picked up, potentially allowing the buyer to lift rents.
Citibank will finance the purchase with a $US530 million floating rate loan, US journal Commercial Mortgage Alert reported.
Grocon has been rumoured to be assembling an investor club to make its move into the US in keeping with its local investments, which have been backed by pension funds from around the world.
The US purchase will further lift the Australian group’s profile as it also embarks on a separate tie-up with UBS Global Asset Management to fund up to $10 billion worth of Australian projects.
Grocon’s play is one of the first moves back offshore by an Australian group. Most listed players are focused on local property but superannuation giant Australian Super last month paid $494m for a half-stake in London’s The Centre MK mall.
Mr Grollo called in real estate services firm Jones Lang LaSalle to advise on the debt package.
Grocon last month won preferred developer status to build the Commonwealth Games Village on the Gold Coast in partnership with Economic Development Queensland. The village for the 2018 Games will have 1300 apartments and the UBS/Grocon Real Estate joint venture is to fund and own the village.
Source: The Australian
