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Weekly Transaction Update - 31st May


This week we recorded 20 major transactions worth $2.4bn

Charter Hall on Acquisition & Fees Hunt

Charter Hall are ramping up their acquisition activities as the group continues to aggregate property across their range of funds prompting JPMorgan analysts to upgrade the property fund manager’s projected haul of performance fees over the next five years.

Charter Hall has been in talks with GIC to acquire a $900M half-stake in the leasehold of the Chifley Tower and Plaza reflecting a yield of under 4.5 per cent. The leasehold runs out in June 2113, however CHarter Hall's Prime Office Fund acquired the freehold interest in December 2018 for $98M.

GIC had attempted to sell the tower last year, however many large institutions were not prepared to deal with a leasehold interest, placing Charter Hall in the box seat for the acquisition.

Charter Hall & GIC has also been linked to a half stake in Telstra’s Melbourne headquarters at 242 Exhibition St as Oxford Properties Group weighs up selling its interest in the $800m complex.

In Brisbane, Charter Hall are backing a plan by the Morris Property Group’s to attract the ATO to its $250M 152 Wharf Street project. The ATO have been in the market for 20,000sq m. The Morris Property Group have proposed a 27-storey commercial tower after dropping an earlier plan for a 197-unit tower on the site.The new commercial scheme features 24,416sq m ​​with ground floor retail and 20 levels of A-grade office space.

On the industrial front, Charter Hall are also buying a 6.18ha site in Eagle Farm that has a 19-year lease to Brisbane City Council. The site in Schneider Road is a bus depot and spins off a net income of $5.2m and has rent reviews of 2.5 per cent.The triple net lease property, being traded via CBRE, could be bought for about $105m.

Charter Halls assets under management are expected to swell to as much as $52 billion over the next five years, a revision upwards from $48 billion. According to JP Morgan, the listed manager could invest as much as $680 million of its own equity into its funds, up from $480 million, and book $265 million in performance fees, up from $245 million, according to JPMorgan.

 

GPT Pick up More Logistics

GPT have ramped up their efforts to diversify their balance sheet with the acquisition of $212M of industrial assets in recent weeks.

The recent purchases include a series of 3 industrial assets being sold by AMP Capital at Kingsgrove, Villawood and Blacktown. The sale price of $105M provides GPT a blended yield of 5.6% across 50,000sqm of NLA.

GPT also acquired 2 industrial buildings for $107M in Erskine Park which include a 25,400 sq m and a 12,300 sq m warehouse, both built in 2009, and which are next to GPT’s 24-hectare Connect@Erskine Park logistics precinct.

 

Challenger Sells Another Brisbane Asset

Challenger continues to offload direct assets with the sale this week of 30 Makerston Street Brisbane to Sentinel Property Group for $103m.

The 14 level office building spans 14,640sq m and it is fully leased with a 4.63 year weighted average lease expiry. The sale price represents a passing yield of 7.85% and a capital value of $7,036/sqm.

Challenger held the asset in its books based on the June 2018 valuation of just $70.7M.

Challenger have now sold off over $1.2bn of real estate across 11 assets since 2015, with another $100m on the market, but also invested a similar amount in higher quality assets.

The latest sale brings to 4 assets disposed in Brisbane including 72 Queen St, 61 Pietrie Terrace, 52 Albert St and now 30 Makerston. In Melbourne sales included 31 Queen St, 500 Chapen St South and an industrial asset in Laverton whilst in Sydney, Challenger have sold assets in St Leonards. Currently on the market are interests in Vicinity's Corio Central and Lennox Village Centres.

Challenger are trading up by selling older style metropolitan or fringe assets in favour of CBD assets or long WALE leases, with the exception of the North Rocks Shopping Centre which has since undergone a minor expansion.

Sentinel has now amassed a portfolio of properties in Brisbane, Darwin, Townsville, Cairns, Newcastle and the north coast NSW regional centre of Port Macquarie worth more than $350m, with the latest acquisition it's largest.