Charter Hall keeps buying in Sydney, August reporting season begins

Charter Hall Group (ASX: CHC) continues to grow with the announcement of two major acquisitions that will bolster its funds under management (FUM) by over $2.2 billion.

Firstly, Charter Hall will acquire a half stake in the iconic Chifley Tower in Sydney for around $900M. The stake was acquired from Singapore sovereign fund GIC, who will retain the remaining half stake. Charter Hall will assume the Asset and Property management of the whole tower, increasing its FUM in the office sector by $1.8 billion. Charter Hall’s half stake will be held in the unlisted Charter Hall Prime Office Fund (CPOF) and DVP wholesale funds/partnerships. The Premium Grade office tower consists of 68,867 sqm of office lettable area across 432 floors with over 5,000sqm of retail space and parking for 377 cars. It is 98.3% occupied on Weighted Average Lease Expiry (WALE) of 4.3 years. The acquisition was struck on a yield below 4.5%.

Charter Hall also announced that it has established a new partnership with two of its wholesale partnerships who will acquire a 68% stake in 201 Elizabeth St, Sydney with Abacus Property Group (ASX: ABP) holding the other 32% as tenants in common. The 34-level office tower will be acquired for a total $630M, reflecting a yield of 5.0% with settlement to occur in two tranches, 75% in November 2019 and the balance in October 2020. Charter Hall’s wholesale partnerships’ 68% stake will add $428.4M to FUM. The property is being sold by Dexus (ASX: DXS) and Perron Group.

Reporting Season has commenced with results released last week from SCA Property Group (ASX: SCP), BWP Trust (ASX: BWP), Centuria Metropolitan REIT (ASX: CMA), Centuria Industrial REIT (ASX: CIP), Charter Hall Education Trust (ASX: CQE), ALE Property Group (ASX: LEP) and Mirvac Group (ASX: MGR).