Charter Hall, Abacus buy Sydney office for US$427m

Australian-listed Charter Hall and Abacus Property have teamed up to buy a Sydney CBD office from Dexus and Perron Group for A$630m (US$427.4m), reflecting a market yield of 5%.

The 201 Elizabeth Street property features about 38,934 sq.m. of net lettable office space across 34 floors, as well as a 1,428 sq.m. lower ground food court, according to announcements.

“Attractive as a repositioning opportunity to an A grade office tower, the acquisition aligns with our strategic priorities and supports Abacus’ transition to a more constant annuity style, stong asset backed business model,” said Abacus managing director Steven Sewell.

The deal comes just days after Charter Hall bought a half-stake in the $1.8bn Chifley Tower skyscraper in Sydney CBD, marking another major transaction in the already hot market.

Charter Hall’s DVP partnership and a new wholesale partnership formed with Canadian pension fund-owned property group Quadreal will acquire a combined 68% interest, while Abacus will hold the remaining 32% stake.

The property is located on a 3,901 sq.m. northeastern corner site near the new Pitt Street metro station, which is anticipated to open in 2024.

Prior to the sale, Dexus secured development approval for a 50-storey mixed-use building providing hotel, retail and residential uses for the site with an estimated cost of $426m.

The deal follows Blackstone’s A$1.52bn acquisition of the Scentre Sydney CBD office towers in June, as well as Australian property group GPT’s A$531m deal for stakes in the nearby Darling Park complex.

In March, local player Dexus bought a 50% stake in the MLC Centre in Sydney CBD for A$800m, while Charter Hall completed its A$804m Shelley Street office deal in January.

The Sydney office market has become an investor hot spot due to the extremely low vacancy rates, robust rental growth and healthy economic conditions.

Charter Hall has $34bn in assets under management and invests in Australian office, retail and industrial real estate, as well as social infrastructure.

Abacus Property has $2.1bn in AUM and invests in commercial and self-storage properties across Australia and New Zealand.

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