Charter Hall, Abacus to buy Sydney tower for $425.9m

Sydney Opera House, Sydney, Australia. Photo: Holger Link/Unsplash

Australian property developer Charter Hall has teamed up with Abacus Property Group to acquire a $38-storey office tower in Sydney’s central business district for A$630 million ($425.9 million).

The transaction will occur in two tranches, with 75 per cent of the total purchase price payable by mid-November 2019 and the remaining 25 per cent subject to a put and call option expiring at the end of October 2020.

As part of the deal, Charter Hall will pick up a 68 per cent stake in the freehold building located on Elizabeth Street, Sydney, whilst Abacus will take up the remaining 32 per cent from a joint venture between Australian companies Dexus and Perron Group.

Charter Hall is acquiring the stake in the tower through two partnerships – an existing Deep Value Property Fund (DVP) partnership and a new partnership formed with one of Canada’s largest pension fund-owned property groups, Quadreal.

According to a report by IPE Real Assets, this is Quadreal’s first investment with Charter Hall. The Canadian firm has previously made investments in student housing and operates a joint venture with Singapore-based ARA Asset Management.

“This off-market transaction reflects the deep relationships we have across our platform with our investor customers, with capacity to fund major transactions in the Australian market whilst continuing out partnership relationship with Abacus,” said Charter Hall group managing director and CEO David Harrison.

The building is said to be 99.9 per cent occupied and benefits from average rent reviews of 3.99 per cent per annum, said Charter Hall.

This is not the first time that Charter Hall is working with Abacus. The pair has offered an all-cash proposal to acquire ASX-listed Australian Unity Office Fund (AOF) for $A2.95 cash per unit.

ASX-listed Charter Hall recently acquired an undisclosed stake in an A$1.8-billion ($1.2 billion) Sydney office skyscraper Chifley Tower from Singapore’s sovereign wealth fund GIC.