This article is from the Australian Property Journal archive
SINGAPORE’S sovereign wealth fund GIC has taken a 50% interest in Charter Hall’s $1.5 billion dual tower project in the Melbourne CBD that will be the future headquarters of Amazon and Aware Super.
The 555 Collins Street deal comes hot on the heels of Charter Hall’s purchase of a half-stake in the $2.1 billion Southern Cross towers, which was speculated for some time to be a whole-asset deal backed by GIC, but that did not eventuate.
Construction began over a year ago at 555 Collins Street after Amazon’s late-2020 commitment to anchor the first tower of 48,000 sqm within the project, while Aware Super committed to six floors at the end of last year, taking the tower to 44% pre-leased.
Charter Hall Prime Office Fund (CPOF) is acquired the 3,000 sqm 555 Collins Street in 2018 and subsequently received planning approval for an 84,000 sqm twin office tower precinct inclusive of 2,300 sqm of retail.
Stage one is due for completion in 2023, adding another tower to a city precinct that already includes the Rialto, 530 Collins Street and 567 Collins Street. CPOF and GIC will be jostling for tenants with a number of other landlords – Melbourne’s CBD has the largest pipeline of new office space in the country over the next three years, with just 29% pre-committed.
The deal arrives as new Property Council data shows Melbourne’s vacancy rate lifted from 11.9% to 12.9% in the six months to July, while office occupancy has gone backwards from 49% in June to just 38% at the end of last month.
Charter Hall office CEO, Carmel Hourigan, said following the major commitments from Amazon and Aware Super “further leasing is well advanced, highlighting the bifurcation we have expected with tenant customers increasingly attracted to brand new, state-of-the-art space to satisfy the expectations of their people and customers”.
“We’re delighted to extend our 22-year partnership with GIC offering one of our CPOF investors the opportunity to co-own what we believe will be one of Melbourne’s pre-eminent new office precincts,” Charter Hall managing director and group CEO, David Harrison said.
“This transaction has provided our flagship office wholesale fund, CPOF, with capital to expand our Melbourne office portfolio via the acquisition of Southern Cross Towers and to further invest in stage two of 555 Collins Street, when appropriate.”
The CPOF portfolio has grown beyond $9.5 billion in scale and represents the single largest office portfolio within Charter Hall’s $26 billion office platform.
The 555 Collins Street transaction was concluded directly between GIC and Charter Hall.
Singaporean investors make their mark
GIC is the latest Singaporean investor to back the future of Melbourne’s CBD, following SGX-listed CapitaLand buying the 120 Spencer Street tower opposite Southern Cross station for over $320 million on a capitalisation rate of about 5%, fund manager HThree City spending $236 million to buy 330 Collins Street, and developer SLB Development picking up the empty former Victoria University campus on King Street for $40 million.
Melbourne’s office market was the fourth-most active in the country over the first half of 2022, according to MSCI. There was $2.015 billion worth of deals in the period, a year on year increase of 17%.
