- Property management Charter Hall Group is spending $830 million to purchase the Telstra building headquarters in Melbourne’s CBD
- Funding the deal will take place through a new partnership comprised of Charter Hall Prime Office Fund and the Public Sector Pension Investment Board – a combined business portfolio worth $5.4 billion
- The 47 storey, 65,913 square metre tower is 99.6 per cent leased by Telstra as of today
- Charter Hall Group CEO David Harrison says vacancy in Melbourne’s CBD is its lowest since 1989 at 3.7 per cent
Property dealer Charter Hall Group is moving to purchase Telstra’s Global Headquarters building in the Melbourne CBD.
The company will be shelling out $830 million to own 100 per cent freehold of the building at 242 Exhibition Street.
To usher in the deal, Charter Hall is forming a partnership, comprised of Charter Hall Prime Office Fund (CPOF) and the Public Sector Pension Investment Board. The combined partnership portfolio is valued at $5.4 billion.
The building is a 47 storey tower, covering 65,913 square metres. Telstra’s occupancy of the building is currently taking up 99.6 per cent of leasing.
This isn’t the first time Charter Hall and Telstra have rubbed shoulders though. Charter originally built the building back in 1992.
The off market transaction is slated for the first half of this ongoing financial year.
“We have a strong track record of creating institutional quality investment opportunities that deliver long term sustainable income for our investors,” said Charter Hall Group CEO David Harrison.
“Continued strong tenant demand has placed downward pressure on the Melbourne CBD vacancy rate, which now stands at 3.7% the lowest level since 1989,” he added.
To help fund the deal, CPOF is currently undergoing a $300 million capital raising. The raising will go into investing the company’s general portfolio, with core office projects valued at $1.6 billion alone.
The company expects the investment into general business to help boost today’s transaction and generate revenue for the company.
Extensive upgrading construction is underway at the Telstra Melbourne office site, including full vertical transportation and general mechanical upgrades.
The average lease expiry lifespan of the building is a solid 11.9 years. Telstra’s current lease is active into the 2032 financial year.
Share prices in CHC are only slightly different today from yesterday’s close, suffering a marginal 0.38 per cent decrease. The shares are trading for $11.71 in a $5.472 billion market cap.