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Charter Hall Group (Charter Hall) today announced that its $5 billion wholesale fund, the Charter Hall Prime Office Fund (CPOF) has purchased a 100% interest in the freehold title of one Sydney’s most prestigious office buildings, Chifley Towerat 2 Chifley Square for $98.5 million.
Charter Hall Group Managing Director and CEO, David Harrison, said:
“Given CPOF owns the adjoining Gresham Building, 167 Macquarie Street leasehold interest, acquiring the Chifley freehold land delivers a strategic holding. Charter Hall has a long-term relationship with the leasehold owner, GIC, and we hope to create a mutually beneficial outcome for both parties. Alternatively, given the capacity for CPOF to match a high yielding leasehold asset with the Chifley freehold site, the total return profile of each asset is complimentary and delivers an attractive total return profile for CPOF’s portfolio. Arguably the best CBD site in Australia, the enlarged footprint represents the largest single amalgamated Sydney CBD site at 7,842 sqm, with stunning views to the north east over Sydney Harbour. This acquisition grows the Groups office portfolio beyond $12 billion of FUM.”
CPOF Fund Manager, Matthew Brown said: “Given the favourable Sydney CBD office outlook, we are excited to be increasing our exposure in such a strategic manner. CPOF is expected to continue its strong sector leading performance for its investors based on current forecasts. The CPOF $5 billion prime-grade portfolio of 24 office properties is well positioned with over 87% located in the strongly performing eastern seaboard states, with a current occupancy level of 98.7% and an average WALE of 6.5 years. The Fund has a weighted average asset age of approximately 8.2 years and strong exposure to high quality tenant covenants with 98% of income from investment grade, government or nationally recognised tenants.”
2 Chifley Square is a freehold site of 6,438 sqm, accommodating a 94.6-year leasehold for Chifley Tower, which comprise a 70,000 sqm premium grade office tower.
The sale of the Chifley freehold site was negotiated by vendors advisers Colliers International and KPMG Real Estate Advisory.
CPOF provided investors with a 15.8% return in fiscal year 2018, and has consistently outperformed the MSCI/Mercer Australia Core Wholesale Monthly Property Fund Index benchmark over 1, 3, 5 and 10 years.