This article is from the Australian Property Journal archive
CHARTER Hall’s Direct Property business has gone on a $275 million spending spree, picking up A-grade office assets in Melbourne’s Docklands and the Adelaide CBD for its PFA Fund.
The acquisitions follow the $804 million purchase of two King Street Wharf office over summer by Charter Hall, which the PFA fund was involved in.
In the latest deals, the A-grade 737 Bourke Street – opposite Marvel Stadium and Southern Cross Station – was purchased for $192 million from Malaysian public services pension fund Kumpulan Wang Persaraan Diperbadankan, also known as KWAP.
Completed in 2008, 737 Bourke Street has a net lettable area of 18,500 sqm across ground floor retail and eight levels of office accommodation, with large flexible floor plates of approximately 2,088 sqm.
The property is 98% occupied by private and government tenants including Lion Dairy and Drinks, owned by global corporation Kirin Holdings; as well as Symbion Health and the Victorian Building Authority, for a 5.5-year weighted average lease expiry and attractive average rent reviews of 3.7% per annum.
“The Docklands Precinct is reaching capacity with limited future supply opportunities and high tenant demand resulting in historically low vacancy rates,” head of Charter Hall Direct, Steven Bennett said.
“The Docklands prime vacancy rate was 0.7% as at Q4 2018, which could lead to continued strong Melbourne effective market rental growth.”
Also purchased is the 15-level, 12,410 sqm tower at 121 King William Street in Adelaide for $82.25 million from US private equity giant Blackstone. Major tenants in the building are Ernst & Young and Jacobs Engineering Group.
Blackstone had purchased the asset as part of the $500 million Motor Accident Commission portfolio of five properties.
The PFA fund is valued at $966 million and owns fourteen office buildings in capital city markets across six states and the ACT. Its portfolio has an occupancy rate of 99%, a high 54% proportion of government tenants, and 7.5-year WALE.
Head of Charter Hall Direct, Steven Bennett, said the acquisitions are consistent with the funds strategy and represent its first assets in both the strong performing Melbourne CBD and improving Adelaide CBD office markets.
“These acquisitions reflect strategic investments in the core Melbourne and Adelaide office markets which are continuing to experience strong tenant demand and effective rental growth.
“The relatively new properties are strategically located, multi-tenanted and further improves the PFA portfolio quality.”
Australian Property Journal
