SYDNEY, AUSTRALIA—Morgan Stanley Real Estate Investing is preparing to cut Investa Property Group loose. The country's third-largest owner of city center offices, IPG is going on the block as MSREI has tapped UBS AG and Morgan Stanley Australia Ltd. to advise on the sale of the investment banking giant's holding in IPG, which manages a portfolio worth about US $6.9 billion.

The Australian daily newspaper reported that possible overseas bidders for IPG include LaSalle Investment Management, the Abu Dhabi Investment Authority and the Blackstone Group. MSREI paid A$6.6 billion, or about US$5.1 billion, to acquire IPG in 2007.

IPG comprises two business units, Investa Office and Investa Land, which has development holdings worth about A$3 billion. The office platform includes Investa Property Trust  and an asset management platform, Investa Office Management Holdings Pty Ltd. IPG manages Investa Office Fund, which trades on the Australian Stock Exchange, the non-listed Investa Commercial Property Fund and assets on its own balance sheet.

Neither of the funds will participate in the bidding for IPT, due to potential conflicts of interest, MSREI says. Prospective bidders for IPT will be offered the opportunity to secure the management services of the office platform, according to MSREI.

Bloomberg reported Wednesday that the planned sale comes at a time when investor interest in Sydney, where the bulk of Investa's portfolio is located, runs high. Yields there have beaten those for similar properties in London or New York City, according to Bloomberg.

Among the assets in the IPG portfolio are 126 Phillip St. and 225 George St. in Sydney and 120 Collins St. in Melbourne. Its tenant roster includes blue-chip companies and a mix of state and federal government tenants.