This article is from the Australian Property Journal archive
FUND manager Charter Hall has made yet another major office play in the nation’s capital, picking up A-grade twin towers occupied by the federal government for $290 million.
Located in the heart of the Canberra CBD, the 42,000 sqm office at 21 Genge Street is home to the Australian Taxation Office and the Department of Veteran Affairs and was acquired with a five-year weighted average lease expiry (WALE) and on a high 7.5% yield.
Charter Hall has already secured a pre-commitment from the ATO for a $300 million office tower it is developing in Barton and which will be completed in 2025.
The Charter Hall-managed partnership taking control of 21 Genge Street is owned by the $10 billion flagship wholesale office fund Charter Hall Prime Office Fund (CPOF), together with Charter Hall Group.
“The investment strategy is to extend the WALE of the asset and take advantage of the modern buildings’ large floorplates and ideal location directly opposite the 260-retailer Canberra Centre shopping centre,” Charter Hall said.
Charter Hall Office CEO, Carmel Hourigan, said, “We welcome two of our major existing customers to the $30 billion office portfolio and look forward to adding value to the building for their benefit”.
“Canberra’s office market is one of Australia’s most resilient office markets with low vacancy rates for prime stock, while large floor plates within a two-tower complex provides flexibility in meeting customers’ needs.”
Canberra’s office vacancy rate lifted slightly to 8.9% in the past six months, but remained the second-tightest market in the country.
Charter Hall is betting on federal government tenants flocking to modern buildings and has made a barnstorming run through the Canberra office market over the past two years. As well as the Barton purchase, Charter Hall set a record for the city with the $363.5 million purchase of the Geoscience Australia HQ property, on a 7.4% yield, from German fund manager Real I.S, which was also the vendor of 21 Genge Street.
It also teamed up with GIC for the $335 million buy of the Marcus Clark building, home to the Department of Education, Skills and Employment, and bought the six-level campus-style Services Australia building in the ACTs Tuggeranong for $306 million, as well as the Doris Blackburn Building that was purpose-built for Services Australia, and a Symonston building central to a plan to protect the Prime Minister and Governor-General and keep government operations continuing in the event of a catastrophic attack.
Charter Hall managing director and group CEO, David Harrison, added, “CPOF continues to curate its portfolio with modern office assets leased to blue chip customers”.
“The relatively high passing yield provides enhanced distribution yields and total returns, while further enhancing resilience in the overall portfolio. The Group also sees deep value and has added this investment to its balance sheet of coinvestments to drive earnings growth and incubate for future partners.”
21 Genge Street holds strong sustainability credentials, including carbon neutral certification and 5 star NABERS Energy rating.
