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Charter Hall (the Group) has confirmed new tenant Aurizon for its latest Brisbane office building, reaffirming Fortitude Valley’s position as a growing near city business community.
The Group today announced that its managed Core Plus Office Fund (CPOF) and Direct Office Fund (DOF) have extended their joint venture by committing to purchase a Fortitude Valley site and will develop a new 19,000sqm office tower. The new office asset is 100% pre-leased to Aurizon, as its new consolidated national Head Office, for an initial period of 12 years.
Aurizon selected the Fortitude Valley site at 900 Ann Street following an extensive market search for new office accommodation, partnering with Brisbane based Consolidated Properties Group (CPG) as its development partner. CPG has partnered with CPOF and DOF for the development management and funding of the property, and Hutchinson has been appointed as the builder under a Design and Construct contract.
Hutchinson recently completed Charter Hall’s nearby BOQ anchored 100 Skyring, a 22,000sqm office tower located in Newstead, three months ahead of programme.
Aurizon Managing Director & CEO Lance Hockridge said 900 Ann Street provided significant productivity and cost reduction opportunities by consolidating the Company’s two current Brisbane office locations into one dynamic location.
“The current market offered a fantastic opportunity for Aurizon to create a bespoke property that delivers benefits across all dimensions – cost and efficiency; environmental footprint; and a collaborative, flexible workspace.”
“It was also abundantly clear that our brief was much more than finding a suitable physical space for our corporate Head Quarters. We needed to create competitive advantage as an employer of choice with a built environment that supported our drive to greater diversity, inclusiveness and collaboration across our workforce,” Mr Hockridge said.
Charter Hall’s Joint Managing Director David Harrison said, “We see this investment, which importantly extends our relationships with Aurizon, CPG and Hutchinson, as an exciting opportunity to create another landmark office tower in Fortitude Valley – a market which has exceeded expectations as a tremendous multi use precinct.
“We have used all aspects of our disciplines to complete this acquisition in a very short timeframe. We are acquiring a quality asset secured on a 12 year lease to ASX listed Aurizon, which is consistent with our strategy of partnering with high calibre tenants on a long term basis to deliver outcomes for both our tenant and investor customers,” Mr Harrison said.
CPG’s Managing Director Retail & Commercial Kieran Cox said: “In many ways the transaction is a natural evolution of existing relationships which existed between CPG, as the developer, Aurizon as the tenant, Hutchinson as the builder and Charter Hall as the financier and owner.”
Avi Anger, Charter Hall’s Head of Transactions, who worked closely with all related parties to complete the transaction in a very tight timeframe said, “The market is becoming extremely competitive for high quality long WALE investment assets, particularly leased to blue chip tenants. This transaction demonstrates the capabilities of our business to secure off market deals and demonstrates how we can create value for our existing business partners”.
The forecast total project cost of approximately $170 million is expected to reflect a 6.5% initial yield on cost for the investment funds and will increase the groups Office AUM to $6.8 billion.
Construction is expected to start in March 2016 and be completed by approximately April 2018.