Sydney-based fund manager Charter Hall and Morgan Stanley Real Estate Investing have joined forces to acquire The Macquarie Group's Sydney headquarters for A$525 million (€337 million; $378 million).
The pair set up a trust structure to jointly acquire One Shelley Street from the office platform of Brookfield Asset Management, Brookfield Office Properties, although Charter Hall will manage the asset. The property has a weighted average lease expiry of 7.5 years and is 100 percent let by the Australian-listed bank.
Charter Hall used capital from its A$2.7 billion Core Plus Office Fund (CPOF) to fund the deal which delivered a 20 percent return in 2015, leading the returns of wholesale office funds according to the IPD/MSCI index.
Charter Hall's CPOF Fund Manager, Craig Newman commented: “The acquisition of One Shelley Street secures for CPOF a strategic property in Sydney's fastest growing office precinct, improving the WALE and average building age of the CPOF portfolio, whilst also improving the average rental growth profile for the Fund, with One Shelley Street featuring annual 4 percent increases.”
Charter Hall's group managing director and chief executive, David Harrison, further noted that momentum across all sectors continues, with equity flows directed to high quality defensive real estate.
“Core office remains attractive to both local and international investors due to the current spread between Australian property income yields and bond yields. This investment environment will continue to drive strong investment in quality Australian commercial property assets,” he said.
Charter Hall has also underwritten the purchase of an A$82 million portfolio of four automotive dealerships, 100 percent leased by Automotive Holdings Group.
The portfolio will form the basis of the Charter Hall Direct Automotive Trust 2 (DAT2), the second automotive retail syndication trust by Charter Hall's Direct Property business. The firm seeks to raise A$48 million of equity and will offer an initial distribution of 7.25 percent for years one and two, and the prospect of capital growth over the initial six year period of the trust.