This article is from the Australian Property Journal archive
CHARTER Hall has joined the growing list of major institutions divesting office real estate, after disposing of a North Sydney building for $212 million on a passing initial yield of 5.21%.
The $3.6 billion Charter Hall Office Trust (CHOT) has sold 65 Berry St North Sydney for a 10% premium to the 30 June 2020 independent valuation.
The property was acquired in 2001 for $74.5 million and CHOT took control of the asset as part of the privatisation of the Charter Hall Office REIT in April 2012. The investment has generated an annualised equity total return of circa 21.5% per annum for CHOT’s investors since 2012.
CHOT fund manager Trent James said the group was approached by the purchaser, a private group, off-market.
“Given CHOT’s focus on major CBD markets, we chose to divest,” James said.
Josh Cullen, Mark Hansen and Steve Kearney of Cushman & Wakefield introduced the deal to Charter Hall.
Charter Hall Office CEO Carmel Hourigan added: “Its pleasing to see a high volume of office sales printing at premiums to 30 June valuations, vindicating our view that asset pricing will be resilient.”
“The sale of a short WALE asset like 65 Berry St further reflects the strength in the market for office assets. In an environment of low interest rates, real estate will continue to be an asset class that is well supported into 2021 particularly as our tenant customer office utilisation rates improve nationally.” Hourigan said.
Built in 1986, 65 Berry St is an A-grade office building comprising circa 14,500 sqm across 17 upper levels of office accommodation and parking for 262 vehicles. It was extensively refurbished in early 2019 as part of WPP’s lease renewal and expansion over 9,700 sqm (or ~705 of NLA). WPP’s lease expires in June 2023 without an option. The building’s occupancy is currently 98.6% with a 2.2-year weighted average lease expiry.
This sale adds to a string of recent office transactions including Lendlease’s APPF acquiring 1 Farrer Place for $584.6 million from GPT, which is looking to reposition its portfolio towards industrial and logistics.
Last month Dexus sold the Harry Seidler-designed Grosvenor Place to China’s sovereign wealth fund for $925 million.
Although all industrial is the new black, a recent CBRE report said Australian office remains the most attractive asset class for offshore investors.
