This article is from the Australian Property Journal archive
CHARTER Hall has acquired the Services Australia offices in Canberra and a pair of Australian Taxation Office buildings as part of a $780 million portfolio purchase that takes its acquisitions in the current financial year to $7 billion.
Four Charter Hall funds have teamed up to acquire the portfolio off-market from South Korean financial services firm AIP Asset Management on an average yield of 5.2%.
The assets have a combined 69,503 sqm of net lettable area and also include the Australian Red Cross Lifeblood headquarters in the southern Sydney suburb of Alexandria, picked up for $159 million.
The six-level Services Australia campus-style building in the ACTs Tuggeranong was bought for $306 million, while the ATO buildings include a 21-storey tower in eastern Melbourne’s Box Hill, bought for $230 million, and the Albury centre for $85 million.
That trio has long leases to the federal government or government-supported tenants with an average weighted average lease expiry of 9.1 years, and benefit from yearly fixed rental increases of between 3.5% and 4.0%.
Charter Hall’s ASX-listed Long WALE REIT (CLW) will own 50% of each of the assets, while Charter Hall Direct Office Fund will take the balance of the Tuggeranong and Box Hill assets, Charter Hall Direct PFA Fund the remainder at Albury, and Charter Hall Direct Industrial Fund No.4 will pick up the other half share at Alexandria.
CLW launched a $250 million equity raising to partially fund its $415.4 million of acquisitions. The fully underwritten 1 for 10.68 accelerated non-renounceable offer is being issued at $4.65 per security, a 3.3% discount to its previous close.
The REIT yesterday also upgraded its full year operating earnings per security guidance to 29.2c per security, a 3.2% increase over FY20, and provided FY22 operating EPS guidance of no less than 2.75% growth over FY21.
In has just secured the New South Wales government’s signature over the remaining 8,600 sqm at The Glasshouse building in Macquarie Park, and settled the $25.4 million acquisition of an Ampol-anchored long WALE convenience retail property in Redbank Plains.
Government and government-related tenants now account for 30% of the Charter Hall platform’s $23 billion office portfolio.
“We continue to deliver on the long WALE and government lease thematic that Charter Hall has pursued for many years which, in the current environment of low interest rates and the focus on secure and growing income streams, provides attractive risk adjusted returns to both our listed and unlisted fund investors,” Charter Hall’s managing director and group CEO, David Harrison said.
“We are also very pleased to secure another asset in the Social Infrastructure sector leased to such an essential service provider as the Australian Red Cross,” Harrison said.
Charter Hall’s total acquisitions in FY21 across the office, retail, industrial and logistics, and social infrastructure sectors now stand at about $7 billion. Recent among those is the sale and leaseback acquisition of 25 PFD Food Services cold storage and food distribution centres for $270 million.
The 50% share of the portfolio acquisition by Charter Hall’s Direct funds lifts the Direct business to approximately $7.5 billion in scale. Charter Hall’s Direct CEO, Steven Bennett, said the funds boast an average WALE of between 7.6 and 11.8 years, and all have in excess of 96% occupancy and are leased to high quality tenant customers.
Colliers, led by James Barber, sourced the transaction off-market on behalf of Charter Hall.
