GIC–Charter Hall JV Buys Sydney Office Tower From Brookfield for A$415M

A joint venture between Singapore’s sovereign wealth fund, GIC and Australian property group Charter Hall has acquired a landmark office building 25 kilometres northwest of central Sydney, according to an announcement by the two companies today.

The JV has paid A$415 million ($287 million) for the Jessie Street Centre in Parramatta, with Charter Hall taking a ten percent interest in the venture, according to sources familiar with the matter who spoke to Mingtiandi.

The seller was Brookfield Property Partners, the real estate arm of Toronto-headquartered Brookfield Asset Management.

The acquisition comes three months after GIC acquired a 25.1 percent stake in a A$4.3 billion fund that holds three prime office properties in Sydney, and is the latest in a series of cooperative investments between Charter Hall and the Singapore sovereign wealth fund.

Enquiries from Mingtiandi to Charter Hall and GIC requesting additional information remained unanswered at the time of publication.

Snapping Up an Office with 99.9% Occupancy

“This strategic acquisition further strengthens a well-established 15-year partnership with GIC who recognise our strong track record of creating institutional quality investment opportunities that we can add value to utilising the second largest office platform in Australia with approximately $18 billion of property assets,” said Charter Hall’s group managing director and CEO, David Harrison.

The JV is buying the office property in Parramatta’s central business district after former owners Brookfield extensively refurbished the building between 2007 and 2009.

The tower’s 53,900 square metres (580,175 square feet) of net leaseable area are spread across 20 storeys, including a podium with one floor of retail and four floors of office space.

Currently 99.9 percent occupied with a weighted average lease expiry of 3.9 years, the Australian Tax Office occupies 11 storeys to anchor the building, while other tenants include government departments, financial services company AMP and legal firms.

Located at 2-12 Macquarie Street, the property is close to the city courts and a five minute walk from Westfield Parramatta shopping mall.

The A$2.7 billion Parramatta Square urban renewal project, which will add 290,000 square metres of retail and office space to what is often referred to as the commercial district of Western Sydney, is 300 metres away.

Benefiting from Sydney Overspill

“The ongoing transformation of Parramatta will see it as a genuine second CBD and is likely to surpass North Sydney as Sydney’s largest metropolitan CBD market,” said Charter Hall fund manager Trent James.

GIC Real Estate’s chief investment officer Lee Kok Sun highlighted improvements in infrastructure in Parramatta, such as a new metro line and a light railway slated to enable travel to central Sydney within 20 minutes by 2024, as boosting the long-term potential of the investment.

“As a long-term value investor, we are confident this asset will generate resilient, income-driven returns,” Lee said.

Parramatta is also expected to catch the overspill of Sydney’s expanding population, with the number of people living in the satellite town forecast to double by 2041.

Diversifying an Australian Portfolio

Despite being GIC’s first acquisition in Parramatta, the sovereign wealth fund has been ramping up its activity in Australia over the past eighteen months including transactions involving office, logistics and residential properties.

Two weeks before its August acquisition of the quarter stake in the Sydney office fund, GIC offloaded a 50 percent share in Sydney’s tallest building, Chifley Tower, for A$900 million.

Ten months before that deal, GIC announced in November 2018 that it had set up a A$2 billion ($1.44 billion) unlisted trust with ASX-list REIT Dexus, to invest in logistics properties in Australia.

In May last year, GIC dipped into the residential market when it teamed up with Tasman Capital Partners to acquire a set of gated housing estates known as National Lifestyle Villages from Blackstone and Navis, with the JV reported to have paid below the portfolio’s asking price of A$275 million.