Commercial property giant Charter Hall has settled the acquisition of two strategic, high-quality commercial freehold assets in Sydney’s Barangaroo precinct for $804 million.
The commercial office assets located at 10 and 12 Shelley Street are leased to Suncorp and Amex respectively and represent the only two freehold office buildings in the immediate King Street Wharf precinct.
The transaction marks one of last year's biggest commercial deals and brings Charter Hall's total office assets to just under $12.9 billion.
Charter Hall acquired the two properties through a partnership structure involving three of its wholesale office and direct office investment funds from previous owner Brookfield.
Combined, the assets have a net leasable area of 42,000sq m and a weighted average lease expiry of 9.5 years with a combined yield estimated at 4.5 per cent.
“These assets are a good fit for Charter Hall’s investment funds, providing quality rental income from strong tenant covenants with long term leases,” Charter Hall chief executive Adrian Taylor said.
“These assets also have the potential to deliver future development upside.”
The A-Grade commercial buildings sit strategically within the new mixed-use Barangaroo precinct and benefit from the ferry terminal and the new entrance to Wynyard train station.
“The City of Sydney’s draft planning strategy is supportive of a floor space ratio uplift for this precinct,” Taylor said.
“As a result, we see potential long-term opportunity to add further density to the sites, notably at 12 Shelley Street which we estimate could accommodate an additional 30,000-40,000sq m of space.”
The sale, which was negotiated by Josh Cullen of Cushman and Wakefield and JLL's Paul Noonan, Rob Sewell and Simon Storry.
The property at 10 Shelley Street was purchased jointly by the Charter Hall Prime Office Fund (CPOF) and Charter Hall Direct Office Fund while 10 Shelley Street was a 50-50 acquisition between CPOF and the Charter Hall Direct PFA Fund.
"These acquisitions extend our partnership with CPOF and demonstrates the strength of the Group's breadth of capital and capacity to leverage our investment capability to secure outstanding transactions for our investors," Charter Hall head of direct property Steven Bennett said.
