This article is from the Australian Property Journal archive
CHARTER Hall has added another $245 million worth of government-leased assets to its portfolio, buying in Canberra and Newcastle from private developer DOMA, including another Services Australia offices building.
The offices have an average initial yield of 5.2% and a nine-year weighted average lease expiry.
In the latest landmark commercial real estate transaction for the nation’s capital, Charter Hall Prime Office Fund (CPOF) purchased a 100% interest in 18 Canberra Avenue. Also known as the Doris Blackburn Building, the A-grade asset was purpose-built for Services Australia as its their head office and is close to Parliament House.
The building has a 5-star NABERS Energy rating and a 5-star Green Star rating.
In May, Charter Hall bought the six-level campus-style Services Australia in the ACTs Tuggeranong for $306 million, while it picked up Australian Taxation office buildings in Melbourne’s Box Hill, for $230 million, and the Albury city centre for $85 million.
“This building is a well-located, modern, purpose-built asset that aligns well with our strategy of acquiring properties leased to high-quality tenants on long-term leases and meets our high standards for sustainability in all our assets,” Charter Hall fund manager CPOF and head office investment management, Matthew Brown, said.
Services Australia opened 2021 with a commitment to anchor Charter Hall’s new $450 million Adelaide tower at 60 King William Street.
Canberra’s resilient office market has seen the vacancies fall to a 12-year low due to the heavy presence of government tenants. Sentinel Group has just added the nation’s control centre for the COVID response to its portfolio for $83 million, and ASX-listed Irongate Group paid $74 million for the home of the federal government’s Australian National Audit Office.
Meanwhile, two Charter Hall Direct funds, the Charter Hall Direct Long WALE Fund (LWF) and Charter Hall Direct PFA Fund (PFA) split the $146 million bill for the recently completed A-grade Newcastle asset, anchored by the NSW government.
It introduces a government covenant to the LWF portfolio, whilst extending the PFA government exposure to over 60%. The building is targeting a 5-star NABERS Energy rating, a 4-star NABERS Water rating and a 5-star Green Star Design and As-Built rating from the Green Building Council of Australia.
LWF recently completed acquisitions of a Coles freestanding supermarket at Five Dock in Sydney with a 14.8-year lease term remaining, together with a Shell-anchored service centre on the Gold Coast. The trio contribute to $120 million in growth for the fund and a combined WALE of 10.3 years.
“All three acquisitions implement our fund strategy to acquire well-located properties with long leases to high-quality tenants across resilient property sectors,” Charter Hall Direct Fund Manager, Julian Menegazzo, said,
“Newcastle is a brand new, high-quality office complex with strong environmental credentials.
“Further, this asset improves the overall quality and diversification of the LWF portfolio by providing an allocation to the office sector and increasing the portfolio weighting to the expanding NSW commercial market, with the strong tenant security that government tenants offer.”
The off-market transactions were brokered by Paul Powderly from Colliers.
Charter Hall head of transactions, Ben Ellis, noted the portfolio buy extends Charter Hall’s long-term track record of securing more than 50% of its acquisitions off-market across all sectors, including the recently announced $560 million of industrial acquisitions acquired off-market.
