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UNDER EMBARGO UNTIL 3PM ON MONDAY 18 APRIL 2016
Charter Hall (the Group) today announced its $2.6 billion wholesale Core Plus Office Fund (CPOF) has acquired the development rights for a 100% leasehold interest in a core Melbourne CBD development site. This follows a decision by the Department of Environment, Land, Water and Planning to approve the Planning Permit Application for the redevelopment of the Wesley Upper Lonsdale site at 130 Lonsdale Street.
In January 2015, Leighton Properties was nominated as preferred developer for the restoration and development of the iconic Wesley site and submitted the Planning Permit Application on behalf of the Uniting Church (the Uniting Church). Following an agreement with Leighton Properties and the Uniting Church, Charter Hall has acquired the development rights for the proposed $500 million redevelopment.
Charter Hall CPOF Fund Manager, Craig Newman said:
“We are pleased to have secured the commercial rights of this strategic development site in one of Melbourne CBD’s most tightly held office precincts. CPOF is taking advantage of the expanded Charter Hall office development team to secure prime office projects off market that will deliver high quality office product and enhanced investment returns to CPOF investors.”
The Wesley site, home of the historic Wesley Church is located in the heart of Melbourne’s entertainment and cultural precinct, set amongst some of the city’s best restaurants and bars and the famous Princess and Her Majesty’s Theatres. The project will involve the reuse and adaption of existing heritage buildings which will further improve amenities for tenants and visitors.
Upon completion, the site to be known as Wesley Place will comprise a new A-Grade tower with 53,000 square meters of commercial office space across 33 floors; a dynamic Town Square with a refreshed food and beverage offering for the area; and a number of courtyard and garden spaces. The building will target a 5 Star Green Star – Office Design & As Built rating with its own rainwater collection system.
The site will be transformed into an activated public space for local workers and residents with quality landscape, lawns and plaza areas providing a variety of spaces for relaxation, meetings, displays and performance of the arts. The site’s design will recognise Melbourne City Council’s long term strategy to form a network of green spaces within the city grid, and represents the only significant site in the northern quarter of the CBD where this can be achieved.
In the past 12 months, two of the Group’s managed funds, CPOF and Direct Office Fund (DOF) have made a number of strategic development acquisitions including the new Western Sydney University (1PSQ) campus in Sydney’s Parramatta and separately the new Aurizon headquarters in Brisbane’s Fortitude Valley both featuring long term lease commitments. More recently CPOF acquired a commercial office building located at 55 King Street in Melbourne’s CBD for $78.5 million which is currently fully leased with potential for medium term redevelopment.
“These acquisitions are in line with CPOF’s investment mandate to own well located, institutional quality assets, creating “build to core” opportunities, and increases the Fund’s exposure to the key east coast office markets of Sydney, Melbourne and Brisbane,” Mr Newman added.
Charter Hall’s agreement provides for the development to be built on land leased from the Church for 125 years. This ensures Wesley Church’s future as a place of worship and community gathering. As part of this agreement, Charter Hall will establish an innovative sinking fund for the preservation and maintenance of the buildings of ‘highest significant’ heritage value on the site. These buildings comprise Wesley Church, Manse, Schoolhouse and Caretaker’s Cottage which represent the earliest intact neo-Gothic church complex in Victoria.
Charter Hall’s Head of Office Development Services, Andrew Borger said: “Today’s announcement recognises the hard work by all stakeholders to ensure the delivery of a world class precinct that combines the rich heritage of the site as well as creating a new vision for Melbourne’s CBD.
“We are looking forward to working with the Uniting Church and all stakeholders as we create a new commercial office precinct with strong connectivity to the contemplative, meeting and event spaces surrounded by café and dining areas".
Over the past 12 months Charter Hall has completed major office projects at 570 Bourke Street in Melbourne and the new BoQ headquarters in Brisbane’s near city suburb of Newstead. At its half year results the Group confirmed its strong office development pipeline which now exceeds $1.5 billion and includes major projects at 333 George Street in Sydney, 1PSQ in Parramatta, GPO in Adelaide and the new Aurizon headquarters in Brisbane’s Fortitude Valley.
“The depth of our internal development capabilities means that we are able to partner with our clients to deliver high performance workspaces as well as create investment grade properties, adding significant value and enhanced income yield and total returns for our managed funds,” Mr Borger said.
Rev Dr Mark Lawrence, General Secretary of the Uniting Church Synod of Victoria and Tasmania, said Wesley Church, Wesley Mission Victoria and the Synod were delighted with the planning decision.
“This is an exciting and important step for the Uniting Church and I commend the hard work that so many have dedicated to achieve this outcome. In particular I want to thank the Victorian State Government, Heritage Victoria and the City of Melbourne for supporting our vision.
“This redevelopment will allow us to preserve a significant part of our city’s heritage and will provide a community space that everyone can enjoy within a sustainably sensitive commercial precinct. We look forward to working with Charter Hall on achieving this,” said Rev Dr Mark Lawrence.
Development works will commence following a signification pre-commitment with the acquisition to be funded using existing debt capacity.