This article is from the Australian Property Journal archive
CHARTER Hall has added another major Sydney suburban office asset to its portfolio, partnering up with Singapore’s sovereign wealth fund GIC to acquire the Jessie Street Centre in Parramatta in a deal worth more than $400 million.
Earlier this week, Charter Hall announced the $331.5 million acquisition of The Glasshouse in Macquarie Park in the northern suburbs.
US giant Brookfield listed the A grade Jessie Street Centre office building at 2-12 Macquarie St earlier this year. The complex has a net lettable area of 53,900 sqm and is 99.9% occupied, comprises a four-level office podium and 15 levels of office space above, as well as 337 parking spaces on a 13,530 sqm site.
A major refurbishment was completed ten years ago, and the building has a 5.5 star NABERS Energy Rating.
Similar to The Glasshouse, the Jessie Street Centre has a strong Australian government tenancy profile, predominantly leased to the Australian Taxation Office, AMP Services Limited and various NSW government service tenancies with a weighted average lease expiry of 3.9 years.
Charter Hall Group managing director and chief executive officer, David Harrison said the group was “proud to advance our relationship with the Australian Taxation Office as a major tenant customer, which further increases our exposure to the Australian government and also the NSW government across our office portfolio”.
The joint venture partners expect the asset will benefit from Sydney’s population growth and significant developments and infrastructure projects nearby, including Parramatta Square, the recent completion of stage one of WestConnex Motorway, the Parramatta Light Rail, and the recently announced Sydney Metro West rapid rail to the Sydney CBD.
Harrison said the ongoing transformation of Parramatta will see it as a genuine second CBD and is likely to surpass North Sydney as Sydney’s largest metropolitan CBD market.
“As a long-term value investor, we are confident this asset will generate resilient, income-driven returns,” Lee Kok Sun, chief investment officer of GIC Real Estate said.
Charter Hall and GIC are co-investors of the Chifley Tower in Sydney’s CBD. Charter Hall bought a 50% interest in the landmark tower in August in a $900 million deal.
“This strategic acquisition further strengthens a well-established 15-year partnership with GIC who recognise our strong track record of creating institutional quality investment opportunities that we can add value to utilising the second largest office platform in Australia with approximately $18 billion of property assets,” Harrison said.
According to the Property Council, Parramatta’s office vacancy rate stands at 2.7%, tighter than the ultra competitive Sydney CBD at 3.7%.
The strength of the market in Sydney’s second CBD has attracted large-scale new projects and big name players. The City of Parramatta Council has just given the green light for Australian Unity Office Fund’s 28,000 sqm Valentine Ave office building.
Last summer, Walker Corporation received approval to develop the two remaining commercial buildings within its $3.2 billion three-hectare Parramatta project, including its repositioned hotel and residential Aspire Tower, which will add a combined 125,000 sqm of space to the suburb’s booming office market. Towers 3 and 4 on the site are fully pre-committed and are under construction.
By the end of 2020 more than 136,000 sqm is expected of newly constructed office space will come online, with a substantial component of this space already pre-committed.
