Charter Hall has splashed $780 million on an office and industrial nine-year weighted average lease expiry (WALE) investment portfolio.
Charter Hall Direct Funds and Charter Hall Long WALE REIT will co-own the assets through a join venture to acquire the first-generation leased portfolio, which included four assets with a total net leasable area of 69,503sq metres.
Charter Hall managing director and group chief executive David Harrison said the acquisition aligned with their long WALE and government lease strategy.
“In the current environment of low interest rates and the focus on secure and growing income streams, [this] provides attractive risk adjusted returns to both our listed and unlisted fund investors,” Harrison said.
“We are also pleased to secure another asset in the social infrastructure sector leased to such an essential service provider as the Australian Red Cross.”
The latest investment portfolio acquisition takes the total investments across the office, retail, industrial and logistics, and social infrastructure sectors to about $7 billion.
The properties in the portfolio are the Services Australia building at Tuggeranong in the ACT for $306 million, the Australian Taxation Office building in Box Hill, Victoria for $230 million, another ATO building in Albury, New South Wales for $85 million, and the Australian Red Cross building in Alexandria, NSW for $159 million.
The portfolio has an average WALE of 9.1 years, with fixed rental increases between 3.5 per cent and 4 per cent per annum.
Charter Hall Direct chief executive Steven Bennett said the 50 per cent share of the portfolio acquisition funds lifts the Direct business to approximately $7.5 billion in scale.
“The opportunity for three of the open for investment Direct funds being able to acquire these assets showcases the diversity of the opportunities the Charter Hall Group provides to its Direct investors and the institutional quality of the assets held by these funds which boast an average WALE of between 7.6 and 11.8 years,” Bennett said.
“All these funds have in excess of 96 per cent occupancy and are leased to high quality tenant customers.”
The off-market deal was brokered by Colliers agent James Barber on behalf of Charter Hall.