Charter Hall Offloads North Sydney Tower for $212m


Normal service is returning to normal across Sydney's office market as fund manager Charter Hall cashes in on a prominent office tower in North Sydney.

Sydney-based manager Intera Group for $212 million acquired the asset.

The building, located at 65 Berry Street, has been part of the $3.6 billion Charter Hall Office Trust since the privatisation of the REIT in 2012.

The 18-level building is well positioned in the new centre of the CBD and sits adjacent to the future Metro station in North Sydney.

The A-grade tower spans 14,500sq m was built in 1986 and refurbished in 2017.

The building is currently fully occupied with a 2.2-year weighted average lease expiry.

Anchor tenant, WPP, holds over 70 per cent of the building with its lease due to expire in mid-2023 without an option.

The British multinational has been in the market to move but is yet to strike a new deal.

The off-market transaction marks a 10 per cent premium to its June 30 independent valuation and was transacted at a 5.21 per cent passing yield.

“Its pleasing to see a high volume of office sales printing at premiums to [its] June valuation, vindicating our view that asset pricing will be resilient,” Charter Hall Office chief executive Carmel Hourigan said.

“The sale of a short-lease asset like 65 Berry Street further reflects the strength in the market for office assets.

“In an environment of low interest rates, real estate will continue to be an asset class that is well supported into 2021, particularly as our tenant customer office utilisation rates improve nationally.”

Intera Group were introduced to Charter Hall by Cushman and Wakefield’s Josh Cullen, Mark Hansen and Steve Kearney, which spurred the off-market deal.

Despite the Covid-19 pandemic reaching Australian shores earlier this year and creating uncertainty over longer-term workplace occupancy, activity is begun to pick up in the office market.

The value of commercial real estate transactions in Australia crashed 58 per cent over the first nine months of the year to just under $11 billion as vendors and purchasers paused their divestment and investment decisions.

Over recent months there has been a strong flow of capital from Singaporean companies and international funds which see Australia as a relatively strong market where they can buy at a time when other markets like Europe and the US remain risky.

Last month, Property Bank Australia sold a nearby 7-level office at 53 Berry Street, on the south west side of Miller Street, for $54 million.

Hong Kong’s Huge Linkage also paid the country’s largest office tower owner, Dexus, $273 million for 60 Miller Street in a deal which requires Foreign Investment Review Board approval.

US funds manager Nuveen is also offering a half-interest in North Sydney landmark 101 Miller Street and Greenwood Plaza, worth about $500 million.

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