Charter Hall is paying $780 million for four offices – three leased to the government.
In the biggest deal, the manager is paying $306m for Canberra’s Tuggeranong Services Australia building, rising six floors at the south west corner of Anketell and Sheerin streets.
In Victoria, the portfolio includes the 20-storey Australian Taxation Office at 913 Whitehorse Road, which is costing $230m.
The other properties are in New South Wales, including in Sydney’s Alexandria – the Australian Red Cross centre at 17 O’Riordan St ($159m).
At Albury, a purpose built ATO-backed asset – 520 Smollett St (pictured, top), is being acquired for $85m.
The assets were sold by South Korea’s AIP Asset Management, formerly known as FG Asset Management.
They are being purchased in a joint venture with Charter Hall Long WALE REIT to hold a 50 per cent interest of each.
The manager’s Direct Office Fund will control the other half of the Tuggeranong and Box Hill assets.
Charter Hall Direct PFA Fund will co-own the Albury investment.
Charter Hall Direct Industrial Fund No 4 will retain the balance of the Sydney property.
The portfolio’s Weighted Average Lease Expiry is 9.1 years with agreements allowing for fixed annual rental increases of between 3.5-4pc (story continues below).
Colliers’ James Barber negotiated the off-market deal for Charter Hall which now owns more than $23b of office product, 30pc of which is rented to government or related tenants.
Charter Hall spends $7b this FY
“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,” managing director and group chief executive officer, David Harrison, said following the latest acquisitions.
“We are also very pleased to secure another asset in the social infrastructure sector lease to such an essential service provider as the Australian Red Cross,” the executive added of the life sciences backed property.
The manager has spent about $7 billion this financial year.
Charter Hall’s Direct chief executive officer, Steven Bennett, said “the opportunity for three of the open for investment Direct funds being able to acquire these assets showcases the diversity of the opportunities the Charter Hall Group provides to its Direct investors and the institutional quality of the assets held by these funds which boasts an average WALE of between 7.6 and 11.8 years”.
Each fund’s portfolio is over 96pc occupied, the executive added.
In a separate deal reported today, the Long Wale REIT and PFA fund secured the NSW government to 8600 sqm of near-new Macquarie Park office, The Glasshouse.
More to come.