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The Charter Hall managed Charter Hall Direct PFA Fund (PFA or Fund) has announced a major acquisition comprising The Glasshouse, a brand-new office building substantially pre-committed to the NSW Government at 45-61 Waterloo Road, Macquarie Park NSW.
PFA will contribute 50% of the agreed purchase price of $331.3 million and is investing in equal partnership with the Charter Hall Long WALE REIT (ASX: CLW), an ASX listed REIT.
Upon completion in March 2020, the building will present a high-quality A grade commercial office building covering 34,947 sqm lettable area with 34,099 sqm of commercial office net lettable area (NLA) over 8 levels, 848 sqm of gross lettable are retail (GLAR), end of trip facilities and 350 private car spaces.
The property is 73% pre-committed to the NSW government on a 12-year lease plus options. At the building completion date if any part of the premises remains unleased the vendor will provide a three year rental guarantee which requires minimum 5 year lease terms to be secured. Accordingly, the property will have a 100% occupancy and a minimum 9.4 year weighted average lease expiry (WALE) from March 2020.
The Charter Hall Direct CEO, Steven Bennett, said “The opportunity to invest in The Glasshouse is consistent with PFA’s strategy of acquiring assets with a long WALE, leased to strong government and corporate tenant covenants. The Fund is benefiting from strong investor equity inflows as investors are attracted to the quality of the office portfolio, the Fund’s distribution yield of 7.0% pa and the monthly distributions paid to investors.”
“The acquisition of The Glasshouse represents a high quality addition to the PFA portfolio and increases its exposure to the strongly performing Sydney office market. The ability to partner with CLW has secured a high quality Long WALE office asset in a Sydney market expected to experience rental growth as the 2024 completion of the new North West Metro line draws near” said Mr Bennett
“Large prime assets like The Glasshouse are of the highest quality and often are only within the reach of large institutional investors. As a result of the access to deal flow from the Charter Hall Group, we are able to offer retail, HNW and SMSF investors exposure to institutional quality assets by partnering with other Charter Hall funds” said Mr Bennett.
The property is located within the established office and industrial precinct of Macquarie Park, which is approximately 15 kilometres north of the Sydney CBD and approximately 250 metres from the new Macquarie Park Metro Station. The Metro North West line now connects Sydney’s north western suburbs to Macquarie Park and through to Chatswood and will be extended to Sydney CBD in 2024.
Charter Hall Office CEO, Adrian Taylor said “The investment extends Charter Hall’s strong relationship with the NSW Government as a major tenant customer of our office portfolio. We have a strong track record of partnering with government tenant customers and ensuring we deliver quality workplace solutions over the long term.”
Charter Hall Direct PFA Fund now comprises 15 office properties, with a weighted average lease expiry of 7.9 years, benefits from 99% occupancy and has a portfolio value of $1.2 billion. The Fund is currently open for investment to retail, HNW and SMSF investors. The Fund’s current income yield is 7.0%1 pa.
1. The income return information for PFA is based on the actual distribution rate of 7.50 cpu (annualised) for the quarter commencing 1 July 2019, and a unit price of $1.06 (Ordinary Units) as at 1 October 2019.