GIC, Charter Hall Buy Canberra Office Tower for Record $236M

Singapore’s sovereign wealth fund GIC has teamed up with Aussie fund manager Charter Hall to buy an office building in Canberra, Australia for A$335 million ($236.06 million) as it continues to ramp up its investment in the country’s booming office market.

GIC has formed a joint venture with ASX-listed Charter Hall to pick up the 12-storey office tower at 50 Marcus Clarke Street from South Korean finance firm Mirae Asset Global Investments, in what analysts are crowning the city’s largest office building deal ever.

“This acquisition will add to the diversification of GIC’s office portfolio across key cities in the Australian market where GIC has been investing in for many years,” Lee Kok Sun, chief investment officer for real estate at GIC. “With the opening of our Sydney office, we look forward to supporting the management of this asset and to generate more value-add with partners, such as Charter Hall.”

This latest display of GIC’s passion for Australian opportunities marked the sovereign wealth fund’s fourth major Aussie purchase to be reported within two weeks, following ASX-listed SCA Property Group’s announcement on Thursday of an A$750 million ($531 million) JV with the sovereign fund to invest in convenience stores across the country, and a pair of Melbourne acquisitions — one announced on 26 November and another today — by separate logistics joint ventures between GIC and industrial fund manager ESR.

GIC, Charter Hall Together Again

The Canberra deal will add more than 40,000 square meters (430,556 square feet) of net leasable floor area to GIC’s growing portfolio Down Under, based on a release on Monday, with the Singapore fund holding a 95 percent stake in the JV while Charter Hall has the remaining five percent interest. CBRE brokered the deal which closed on 1 December.

The 50 Marcus Clarke property is a grade A office building sitting on a 4,801 square metre plot in the City West precinct of Australia’s capital, where GIC is preparing to open its 11th global office location next year.

With the buyers agreeing to a price of A$335 million for the 11-year-old asset, GIC and Charter Hall are paying the equivalent of A$8,375 ($5,931) per square metre of net leasable area in the building.

Scoring a 5.5 star rating on Australia’s NABERS system for energy efficiency and a 6 star score on the country’s Green Star system for sustainable buildings, 50 Marcus Clarke Street is now wholly leased to the Australian Department of Education, Skills and Employment (DESE), with that 15-year contract set to expire in 2025, with the government agency reportedly already looking for a new home.

Completed in 2010 by local private developer Walker Corporation, Mirae Asset Global Investments acquired the property from Malaysian bank CIMB in 2017 for A$321 million, based on media reports.

Canberra’s Top Asset

Of the three office deals valued at A$300 million or more ever recorded in the Australian Capital Territory (ACT), which includes Canberra, two involved 50 Marcus Clarke Street, according to Nic Purdue, CBRE’s director for capital markets in Canberra, who said the record price point reflected the property’s quality and reputation.

“The deal metrics reflect the quality of the asset and tenant covenant, and the future of the office occupier market in the ACT (particularly across the federal government sector),” Purdue told Mingtiandi.

For the past 15 years, Charter Hall and GIC have been teaming up to close deals across sectors, which according to David Harrison, managing director and Group CEO of Charter Hall, is a reflection of the company’s strong market position, drive to grow its presence in Canberra’s office market, and their commitment to provide greater services to the Australian government.

“50 Marcus Clarke is a well-located, modern asset that meets our high standards for sustainability and aligns well with our strategy of acquiring properties leased to high-quality tenants,” Carmel Hourigan, office CEO of Charter Hall.

This latest deal follows GIC’s tie up with Charter Hall in October of last year when the duo paid A$682 million for a 49 percent interest in a portfolio of convenience stores operated by Ampol, Australia’s biggest oil refiner.

Eyes on the Aussie Market

The sovereign wealth fund, which manages more than $744 billion in assets as of mid-June, has been expanding its presence in Australia with a series of major acquisitions this year, including its purchase of a portfolio of 11 Travelodge hotels from Swiss private equity firm Partners Group in July.

During this year GIC has focused much of its attention on Australia’s logistics market, including its April partnership with ESR to purchase the Milestone Logistics portfolio from Blackstone for A$3.8 billion. In late November, ESR’s Australia Development Partnership (EADP), which is majority owned by GIC, agreed to buy 2-50 Glenelg Street in Melbourne’s Coolaroo suburb for a reported A$45 million.

Today, a LinkedIn post by ESR Australia said that its ESR Australia Logistics Partnership II (EALP II), which is also backed by GIC, is buying a 13,290 square metre logistics property at 18 Fairchild Street in Melbourne’s Heatherton suburb.

GIC latest Canberra office purchase has it joining the club of Singaporean investors picking up Aussie office assets, including SGX-listed CapitaLand Integrated Commercial Trust, which said on Friday that it is buying two office buildings in Sydney for A$672 million ($472 million).

Also last week, Keppel REIT said that it has agreed to pay A$327.7 million to purchase a North Sydney office development from a Phoenix Property Investors joint venture.