The real estate arm of British Columbia Investment Management Corporation and Australian real estate fund managers Charter Hall and Abacus have teamed up to acquire a Sydney office tower for A$630m (€383m).
QuadReal and Charter Hall’s Deep Value Property Fund (DVP) have established a joint venture to acquire 68% of 201 Elizabeth Street, while Abacus will assume a 32% interest and Charter Hall itself will own 4%.
The consortium is buying the ‘tenants in common’ interest in the 38,934sqm building from a 50/50 joint venture between Australian fund manager Dexus and private company Perron Group.
The transaction will take place in two tranches, with the first 75% of the purchase price payable by the middle of November this year, and the remaming 25% subject ot a put-and-call option that expires at the end of October 2020.
Abacus said the cost of its 32% interest was A$201.6m.
Peter Kim, managing director for Asia at QuadReal, told IPE Real Assets that the Canadian institutional investor would own a stake in the asset that was equal to those of Charter Hall Fund and Abacus.
He said this was QuadReal’s first investment with Charter Hall, but it already had exposure to Australia through investments in student housing and a joint venture with Singapore-based ARA Asset Management.
The investment in 201 Elizabeth Street is part of QuadReal’s objective to eventually have 50% of its C$37.6bn (€25.4bn) real estate portfolio located outside Canada.
Kim said: “Establishing and extending partnerships with experienced real estate managers and investors is critical to our forward strategic plan. Thus the value to us of partnerships such as the one with Charter Hall Fund and Abacus.”
David Harrison, Charter Hall Group CEO, said he had been talking to QuadReal for two years. He told IPE Real Assets that the plan would be to retain the premises as an office building.
“We will not be proceeding with an existing development approval to convert the building into a luxury hotel and residential apartments,” he said. “We see this as a good office building. We will refurbish and re-lease.”
Abacus managing director Steven Sewell said there was “long-term fundamental value” in the A-grade office tower and it was “an attractive repositioning opportunity”.
He added: “The acquisition aligns with our strategic priorities and supports Abacus’ transition to a more constant-annuity-style, strong-asset-backed business model.”