Charter Hall and GIC drop $335 million on Canberra office building

Charter Hall and GIC drop $335 million on Canberra office building

50 Michael Clarke (via Charter Hall).

Charter Hall and Singaporean wealth fund GIC have today acquired an office building fully leased to a government tenant in Canberra for $355 million.

The joint acquisition will see GIC acquire the vast majority of the property (95 per cent), with Charter Hall to own the remaining 5 per cent.

Located in a prime position in Canberra’s CBD with access to all major amenities and transport facilities, 50 Marcus Clarke is a modern A-grade office building with 40,000 sqm of net leasable area.

“We are pleased to acquire this iconic office building in Canberra’s CBD with Charter Hall, a leading market player with strong experience in the Canberra market,” GIC chief investment officer of real estate Lee Kok Sun said.

“This acquisition will add to the diversification of GIC’s office portfolio across key cities in the Australian market where GIC has been investing in for many years.

“With the opening of our Sydney office, we look forward to supporting the management of this asset and to generate more value-add with partners, such as Charter Hall.”

Charter Hall managing director and group CEO David Harrison said the strategic acquisition further strengthens the company’s 15-year multi-sector relationship with GIC and reflected the company’s strong market position in Australia.

“We are also pleased to advance our relationship with the Australian Government as a major tenant customer, and further increase our exposure to Canberra’s growing office market as our Office portfolio in Canberra approaches $1 billion,” Harrison added.

CBRE’s Michael Andrews, who represented the vendor, said the Canberran office market had been a “standout” this year.

“Canberra has been a standout office market in 2021, with investment activity on track to hit a new record. We are currently tracking $1.17 billion in total office sales, which has completely eclipsed the decade average of $375 million, with another $300 million in sales in the pipeline,” Andrews said.

“This coincides with Canberra recording its lowest vacancy rate since 2012 amid ongoing confidence in the local economy, despite the backdrop of COVID-19.

“The weight of investment capital targeting the ACT market was evident in the recent sale campaigns for 38 Sydney Avenue, 25 Constitution Avenue and 2-6 Bowes Street, with the bidder depth for these assets highlighting the demand for government-backed income in addition to burgeoning first-time investor interest in Canberra.”

The deal comes just days after GIC partnered up with SCA Property Group (ASX: SCP) to establish a joint venture that will be known as the SCA Metro Convenience Shopping Centre Fund.

SCA will own 20 per cent of the fund, which it will seed with seven assets from its existing portfolio totaling $284.5 million at a weighted average capitalisation rate of 4.84 per cent.

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