Property fund manager Charter Hall has returned to Melbourne’s Collins Street to purchase the freehold of Collins Place, paying $65 million for the freehold interest in the 40-year-old commercial precinct.
The Charter Hall Prime Office Fund (CPOF), which has $9.5 billion in assets under management, picked up the 13,350sq m site’s freehold, in an off-market handled by Colliers International’s Adam Woodward.
Collins Place comprises 100,000sq m of A-grade office space and the 5-star Sofitel Hotel across two skyscrapers at 35 and 55 Collins Street in the centre of the highly coveted Paris end of Melbourne’s CBD.
Built by AMP and opened in 1981, the commercial precinct is recognised as one of Melbourne’s most iconic complexes.
The centre was designed by the acclaimed US architect I.M. Pei with Melbourne’s Bates Smart and built in seven stages over 10 years at a cost of more than $270 million.
The 100-year leasehold of Collins Place is owned by the AMP Wholesale Office Fund and is the fund’s largest single asset.
Charter Hall managing director David Harrison said the acquisition presented a unique opportunity for CPOF investors to secure one of the largest, freehold title, prime CBD sites nationally.
“We have long recognised the value of freehold land and precincts, demonstrated by the 2019 purchase of Sydney’s premium office precinct, Chifley Tower, and the subsequent planning process to develop a complementary South Tower to the existing North Tower,” Harrison said.
“At a modest plot ratio of approximately 10:1, we believe Collins Place is significantly under-utilised compared to nearby precincts.”
Harrison said comparable major sites had achieved over 20:1 plot ratios including 80 Collins Street and Charter Hall’s 555 Collins Street, which achieved 86,000sq m of approved floorspace across a 3300sq m site—equating to about 24:1 plot ratio.
The strategy has paid dividends. This month CPOF cashed in a half stake in the first stage of its $800-million project at 555 Collins Street, which is currently under construction and will be anchored by Amazon and Aware Super upon completion.
The move to purchase the Collins Place freehold interest also further consolidates Charter Hall’s exposure in Melbourne’s financial district, making it the largest CBD landowner in the Paris end, totalling 40,000 square metres.
Other sites include Southern Cross Towers, Wesley Place, Telstra HQ at 242 Exhibition Street, as well as 11 and 288 Exhibition Street.
The fund manager’s long-standing strategy has been to unlock under-utilised floorspace in prime locations that have the potential to add value to the freehold asset over time.
Late last year, CPOF acquired the freehold interest in 383-395 Kent Street in Sydney’s CBD—a site of about 3600sq m benefitting from two street frontages—for $385 million.
