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Charter Hall aims for Chifley Tower

February 15, 2019

Charter Halls' Prime Office Fund settled on the freehold title acquisition of GICs Chifley Tower for $98.5M after exchanging the deal in mid December with the private vendors, Chifley Freehold Limited.

 

With the freehold title in Charter Hall's hands the prospect of Charter Hall acquiring a slice of the leasehold interest in Chifley Tower has become more likely.

 

GIC bought the leasehold interests in Chifley Tower jointly with Morgan Stanley Real Estate Investing (MSREI) in 2005 for about $710m. GIC has since bought out MSREI to become sole owner of the building.

 

In late 2018, GIC offered a 50% leasehold interest in the tower however they failed to achieve the $900M they had hoped for citing "increasing uncertainty in the macro environment and the general real estate market". The leasehold interest has a 94.6yrs remaining term however the market may well have been concerned about other terms in the leasehold interest.  

 

GIC and Charter Hall have an existing relationship with GIC mandating Charter Hall to acquire several office towers in Brisbane worth close to half a billion dollars. So with the freehold interest in Charter Halls hand, the prospects for Charter Hall being the successful party on the leasehold interests are much higher.

 

Charter Hall also own an adjoining leasehold interest at 167 Macquarie Street which could be redeveloped to incorporate the Chifley retail precinct which performs well as a food court, but has limited other retail uses.

 

Time will tell.

 

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