Charter Hall buys Bankwest Place and Raine Square in Perth for $458 million

Listed property trust Charter Hall has formed a partnership with a local super fund and a Canadian pension fund to acquire Bankwest Place and the associated Raine Square shopping centre in the Perth CBD for $458 million, seeing off competition from both local and offshore investors.

The mixed-use asset will be equally owned by the Charter Hall Core Plus Office Fund, Telstra Super and Canadian pension fund PSP, as identified by the Australian Financial Review.

The price equates to a yield of around 6% with a market capitalisation rate of 7.6%.

The complex was sold by CBRE on behalf of KordaMentha, acting as the receivers for property developer Luke Saraceni and Hossean Pourzand’s Westgem Investments Pty Ltd.

It was built at a cost of around $500 million.

KordaMentha were appointed by Bankwest as receivers in January last year in a bid to recover debts exceeding $400 million owed to Bankwest and Bank of Scotland.

In September last year Saraceni lost his Supreme Court bid to remove KordaMentha as receivers.

In October, Saraceni launched a $200 million-plus damages claim against Bankwest over the collapse of his property empire last year.

Saraceni and Pourzand lost control of the tower after missing a vital $50 million repayment to financiers Commonwealth Bank-owned Bankwest and Bank of Scotland in late 2010.

The 22-storey office, the headquarters of Bankwest and the accompanying shopping centre, cover 61,500 square metres of lettable area on a 12,300 square metre city block with four street frontages including William, Murray and Wellington Streets.

It has 45,000 square metres of office space and is 100% leased to Bankwest on an initial 12 year lease with renewal options expiring in 2024.

There is almost 10,000 square metres of retail space across three levels in the shopping centre, anchored by Coles, which has a 15 year lease, with links to The William Street train station via an underground tunnel.

It opened in 2012 with 67 retail tenancies and a weighted average lease expiry (WALE) of six years.

There are also two hotel complexes totalling 5,700 square metres leased for a further eight years.

Total occupancy across office, retail and the hotels is 95.5%.

The selling agents were Scott Gray-Spencer, Michael Andrews and Peter Agostino from CBRE and John Williams, Simon Storry and John Talbot from Jones Lang LaSalle.

“The property was highly sought after by both on and off shore investors,” said Michael Andrews, senior director of CBRE’s international investments team.

“The popularity of Bankwest Tower and Raine Square highlights the depth of the investor market  and the popularity of core Australian CBD  assets due to our comparatively high yields and favourable debt conditions,” he said.

CBRE’s Western Australia managing director Peter Agostino said the deal “highlights the strength of the WA economy and the Perth CBD as a desirable investment location”.

“Assets of this size and quality are rarely traded and to achieve this result is a real confidence boost for the WA market.”

Charter Hall’s managing director David Harrison said the he acquisition was in line with its strategy of “raising and deploying capital into core real estate investments and continues the momentum of matching our partners’ capital with attractive investment opportunities”

He anticipates a combined annual growth rate of 5% for office rental income.

“Despite the slowdown in the resources sector, we are confident about the longer term outlook for Perth and are attracted to the security of a non-resource tenant of Bankwest’s calibre in this active precinct,” Harrison said.