Charter Hall’s $4.5 billion Direct Property business has announced the acquisition of an A-grade office asset in the Melbourne CBD for $192 million.
The move bolsters the REIT's unlisted the $966 million PFA Fund, which owns fourteen office buildings in capital city markets across six states and the ACT.
Charter Hall's latest acquisition, located at 737 Bourke Street, was sold by Malaysian public services pension fund KWAP after acquiring the Docklands building in 2010 for $113 million.
The 18,500sq m asset in the heart of the business sector of Melbourne’s Docklands has a 98 per cent occupancy and a weighted average lease expiry of 5.5 years.
The A-grade office building is tenanted by Lion Dairy and Drinks, owned by the global Kirin Holdings, Symbion Health and the Victorian Building Authority.
The building, that sports an on-site cafe and restaurant, secure parking, dedicated onsite building management and end-of-trip facilities, sits next to Southern Cross Train Station.
The deal was brokered by JLL's Leigh Melbourne, Nick Rathgeber and Paul Kempton.
Charter Hall's Bourke Street acquisition followers the capture of a smaller office building at 121 King William Street in the Adelaide CBD for $82.25 million, which has also been added to PFA Fund's portfolio.
The officer tower was purchased from private equity group Blackstone marking the largest commercial deal in Adelaide this year.
The King William Street property is an A-grade building spanning 12,410sq m that sits in the CBD and has a strong underlying covenant base.
The building is tenanted by Ernst & Young and Jacobs Engineering Group.
Head of Charter Hall Direct Steven Bennett said the acquisitions are consistent with the funds strategy and represent its first assets in both the strong performing Melbourne CBD and improving Adelaide CBD office markets.
“These acquisitions reflect strategic investments in the core Melbourne and Adelaide office markets which are continuing to experience strong tenant demand and effective rental growth,” Bennett said.
“The relatively new properties are strategically located, multi-tenanted and further improves the PFA portfolio quality.”
Adelaide's prime vacancy rate has trended down since 2016, reaching 9.7 per cent in the first quarter, a dip from 12.1 per cent in the previous quarter.