GIC offloads half-stake in US$1.2bn Sydney office to Charter Hall

Singapore’s sovereign wealth fund GIC has sold a half-stake in its A$1.8bn (US$1.2bn) Chifley Tower skyscraper in Sydney to Australian property group Charter Hall.

Charter Hall’s Prime Office Fund (CPOF) and DVP wholesale funds/partnerships have formed a joint venture with GIC and will take over all asset and property management for the 68,867 sq.m. office building, according to an announcement.

Chifley Tower
Chifley Tower (image: GIC)

“We have used our diversified funds platform to bring two of our wholesale funds/partnerships together to form a joint venture with GIC to own one of Australia’s pre-eminent premium grade office towers situated on arguably the best prime CBD site in Sydney,” said Charter Hall managing director and CEO David Harrison.

Chifley Tower is the latest asset to be traded in the hot Sydney CBD office market, where the tight supply market and positive economic conditions have fuelled robust rental growth.

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The tower, which sits on the second largest site in the Sydney CBD at 6,438 sq.m., has 42 levels of premium-grade office space and more than 5,000 sq.m. of prime Sydney CBD retail across three levels.

The 98.3%-let asset has a 4.3-year weighted average lease expiry and weighted average rent reviews of 3.8%. Tenants include UBS, Investec, Sumitomo Mitsui Banking Corp and Morgan Stanley Australia.

“This off-market transaction reflects the deep relationships we have across our platform, extends the Office platform FUM to over $15 billion, whilst also extending a well-established 15-year relationship with GIC,” Harrison added.

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.

Investors have been chasing assets in the Sydney CBD and fringe markets to tap into the serious shortage of available space in the city centre, as well as the major transport infrastructure works underway and other factors.

GIC initially put the Chifley Tower stake on the market in September 2018 and then withdrew it last November.

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