The AUD3.5bn (€2.36bn) Charter Hall Prime Office Fund (CPOF) has purchased an office tower in Melbourne from Blackstone for AUD114.5m.
The sale is part of Blackstone’s disposal of assets from a portfolio it acquired from the Motor Accident Commission of South Australia in May this year for around AUD600m.
The fund’s manager, Charter Hall Group, negotiated an off-market deal for the building, which is located at 990 LaTrobe Street in Docklands, now considered an extension of the Melbourne central business district (CBD).
Charter Hall managing director and CEO David Harrison said: “We are able to leverage our strong relationships with groups like Blackstone, who have a counter-cyclical opportunistic investment strategy, to secure, long [weighted-average lease-expiry] office assets in the strongly performing Melbourne and Sydney CBDs.”
CPOF recently completed AUD550m of equity raising from domestic and global institutions to fund its ongoing programme to develop and acquire prime office assets.
Adrian Taylor, Charter Hall’s head of office, said the acquisition is in line with CPOF’s investment mandate to own well-located, institutional-quality assets leased to strong tenant covenants with a solid income stream and fixed annual rental increases.
A Victorian government agency, Melbourne Water, is the sole tenant of 990 La Trobe Street. Charter Hall said Melbourne Water has a weighted-average lease (WALE) expiry of 10 years, with 4% fixed annual rental increases.
Taylor said the acquisition improves CPOF’s WALE from 6.3 to 6.4 years and increases the fund’s weighting to another high quality Victorian Government tenant and the strongly performing Melbourne office market.
Charter Hall is one of the largest managers of prime-grade CBD office properties in Australia, with more than $9bn in its office portfolio.