Charter Hall’s Core Plus Office Fund (CPOF) has created a new wholesale trust with an investment vehicle sponsored by Morgan Stanley Real Estate Investing (MSREI), together acquiring 100% per cent of One Shelley Street, Sydney for $525 million.
The One Shelley Street property transaction - currently Macquarie Group's headquarters - located in Sydney's King Street Wharf precinct represents the largest single office property deal in Sydney since 2014.
Sources for the agreement say the yield ranges from below 5.25 per cent to approximately 5.3 per cent.
One Shelley Street, Sydney is a prominently positioned prime-grade office building located directly adjacent to the south side of Barangaroo, and benefits from the improved accessibility to the Wynyard bus/rail interchange, and the revitalised retail and restaurant precinct in the area.
Charter Hall’s CPOF Fund Manager, Craig Newman said “the acquisition of 1 Shelley Street secures for CPOF a strategic property in Sydney’s fastest growing office precinct, improving the WALE and average building age of the CPOF portfolio, whilst also improving the average rental growth profile for the Fund, with One Shelley Street featuring annual 4% increases.”
Charter Hall’s Head of Office, Adrian Taylor said “following recent acquisitions, the $2.7 billion CPOF continues its evolution into one of Australia's highest rated wholesale office funds, having delivered a 20.0% return in 2015, leading the returns of wholesale office funds according to the IPD/MSCI index.”
Charter Hall’s Group Managing Director and CEO David Harrison further noted that momentum across all sectors continues, with equity flows directed to high quality defensive real estate.
“Core office remains attractive to both local and international investors due to the current spread between Australian property income yields and bond yields. This investment environment will continue to drive strong investment in quality Australian commercial property assets.”
The Group has also underwritten the purchase of an $82 million portfolio of assets which form the basis of the Charter Hall Direct Automotive Trust 2 (DAT2), the second DAT retail syndication trust by Charter Hall’s Direct Property business. The new trust will be managed by Charter Hall, and has increased Charter Hall’s total funds under management to $17 billion, including over $8 billion in the office sector.
