Charter Hall Fund Takes Over Virgin Australia HQ for $91 Million


Charter Hall Long WALE REIT has acquired Virgin Australia’s head office in Brisbane’s Bowen Hills for $90.8 million from an unlisted fund managed by its parent, Charter Hall.

Virgin’s head office is located at 56 Edmonstone Road, Bowen Hills, on the city’s fringe.

The A-Grade freehold asset comprises 12,427sq m of net lettable area across three low rise office buildings and is fully leased to Virgin Australia with an 8.4-year WALE.

The acquisition price reflects a 6.9 per cent initial passing yield and 6.8 per cent capitalisation rate.

At the same time, the REIT has announced it is conducting a $94.1 million fully underwritten accelerated non-renounceable entitlement offer to fund the Virgin acquisition including transaction costs.

"The acquisition of Virgin Australia Head Office improves the sector, geographic, tenant and tenant industry diversification of the REIT's portfolio and improves the earnings growth profile of the REIT as a result of the fixed rent reviews of 3.5% per annum from this property," Charter Hall fund manager Avi Anger said.

“Virgin Australia Head Office is leased to Virgin Australia, an ASX-listed entity with a A$2.5 billion market capitalisation and has major global shareholders including Etihad Airways, Singapore Airlines, HNA Group and Virgin Group."

[Related reading: Charter Hall's $450 Million Brisbane Square Office Tower]

CBRE agents Bruce Baker and Flint Davidson and Savills' Anthony Ott and Peter Chapple were appointed by Charter Hall to handle the sale of the property.

Charter Hall also announced the REIT has undertaken independent revaluations of properties representing 39 per cent of the portfolio’s value as at December 2017, with these revaluations indicating a $19.6 million uplift.

This acquisition increases the REIT’s office sector exposure from 26 per cent to 31 per cent and eastern seaboard exposure from 52 per cent to 55 per cent.

The Virgin deal comes of the back of a number of recent transactions for the Charter Hall group including the acquisition of prominent commercial office building opposite the national parliament building in Canberra for $58.6 million. The purchase was made by the new managed Charter Hall Direct PFA Fund.

In November, Charter Hall Retail REIT sold three shopping centres in Wynyard, Tasmania, Albany Creek Square in Brisbane and Renmark in South Australia for $91 million as it shifts focus to larger, higher growth properties.

Charter Hall’s unlisted wholesale partnership, Brisbane Square Wholesale Fund, in October entered into an exclusive heads of agreement with QSuper to pre-lease 17,200sq m at Charter Hall’s proposed Brisbane Square Tower 2.

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