Charter Hall, Morgan Stanley arm buy One Shelley St building for $525 million
Property fund manager Charter Hall Group (ASX: CHC) and Morgan Stanley Real Estate Investing (MSREI) have together bought One Shelley Street, leased to Macquarie Group, in Sydney's Darling Harbour for $525 million.
Charter has also underwritten the purchase of an $82 million portfolio of assets which form the basis of the Charter Hall Direct Automotive Trust 2 (DAT2), the second DAT retail syndication trust by Charter Hall’s Direct Property business, said a media release.
The transaction was through a trust created by Charter Hall’s Core Plus Office Fund (CPOF) and sponsored by Morgan Stanley Real Estate Investing. The new trust will be managed by Charter Hall, and has increased Charter Hall’s total funds under management to $17 billion, including over $8 billion in the office sector.
One Shelley Street is a prime-grade office building leased to ASX-listed Macquarie Group, and also popularly referred to as the millionaire's factory.
The site is secured with a weighted average lease expiry (WALE) of 7.5 years.
“The acquisition of 1 Shelley Street secures for CPOF a strategic property in Sydney’s fastest growing office precinct, improving the WALE and average building age of the CPOF portfolio, whilst also improving the average rental growth profile for the Fund, with One Shelley Street featuring annual 4% increases,” Charter Hall’s CPOF fund manager Craig Newman said.
Charter Hall’s managing director and CEO David Harrison noted that momentum across all sectors continues, with equity flows directed to high quality defensive real estate.
“Core office remains attractive to both local and international investors due to the current spread between Australian property income yields and bond yields."
Additionally, Charter Hall has launched DAT2, which comprises a portfolio of four established and new automotive dealerships, 100% leased by Automotive Holdings Group (ASX:AHG) on long-term leases.
DAT2 seeks to raise $48 million in equity and expects to offer a stable earnings stream with an initial distribution of 7.25% for years one and two, and the prospect of capital growth over the initial six-year period.