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Charter Hall, Abacus start FY22 with $666 million in deals

Charter Hall

Charter Hall Group and its entities have started the new financial year with a bang, announcing $531 million in acquisitions including a one-third share of the Myer Melbourne store and the biggest Brisbane office deal of 2021 so far.

In the Brisbane transaction, Charter Hall Prime Office Fund took full ownership of 275 George St, acquiring the 50 per cent it did not own from Singapore based Keppel REIT for $264 million at a capitalisation rate of 5 per cent.

As co-owner of the adjoining tower at 69 Ann St in partnership with Charter Hall’s Direct Office Fund, CPOF now controls 8000 square metres of prime Brisbane CBD real estate with three street frontages and 68,400 square metres in lettable space.

Consolidation is a core strategic goal of CPOF, said fund manager Matthew Brown.

“This acquisition is a continuation of CPOF’s tactical reweighting of the portfolio towards high-quality modern assets where we have the ability to create major CBD precincts.”

Keppel REIT made a $98 million gain on the deal, brokered by Seb Turnbull and Paul Noonan from JLL, after paying $166 million for its half-share of the 31-storey tower in 2010, its first investment in Australia where it still has interests in five buildings.

Paul Tham, chief executive of Keppel REIT, said the sale will “provide us with flexibility as we seek strategic and higher-yielding acquisitions”. Proceeds will initially be used to pay down debt, reducing its leverage to just under 38 per cent.

Charter Hall’s Long WALE REIT (CLW) also announced three acquisitions headlined by its purchase of 33.3 per cent of the Myer’s Bourke Street Mall property in central Melbourne for $135.2 million.

In a simultaneous transaction, ASX-listed Abacus Property Group bought 33.3 per cent of the iconic retail asset for the same amount on a passing yield of 6 per cent, reflecting the decline in retail asset values since the onset of COVID-19.

The vendors were Nuveen Real Estate and GIC. Property manager Vicinity Centres retains its one-third share, most recently valued at $142.5 million, down from the $492 million it was worth just over one year ago.

Combined, this is the largest CBD retail transaction in Australia of 2021 and the biggest in central Melbourne for 13 years. The 66.6 per cent share was taken to market by Lachlan MacGillivray from Colliers and JLL’s Sam Hatcher.

Myer Pty Ltd has a lease of 10.5 years on the nine-level property, which offers revenue enhancement and development opportunities, said Abacus managing director Steven Sewell.

“With the potential for a degree of repositioning, this is a great opportunity to implement active asset management plans and drive superior returns,” Mr Sewell said.

CLW fund manager Avi Anger said the Myer acquisition aligns with its holding in the David Jones department store in Castlereagh Street, Sydney.

“Together they represent two of Australia’s most iconic CBD buildings,” Mr Anger said.

CLW also announced the purchase of a Brisbane distribution centre leased to Simon National Carriers for $83.1 million, and 100 per cent of a Bunnings store on the southern fringes of Perth, which cost $49 million.

Combined, they will return a passing yield of 5.1 per cent with a weighted average lease expiry of 11.2 years.

“As a result, we have upgraded FY22 operating earnings per share guidance to growth of no less than 4.5 per cent over forecast,” Mr Anger said.


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Bridge to 2032 – Brekky Ck span approved, missing link for Games athletes’ village

Brisbane is set to have another major infrastructure project underway by the end of the year after Lord Mayor Adrian Schrinner lodged the final design of the Breakfast Creek green bridge with planning officers for approval.

The $67 million project is likely to provide a smoother connection for pedestrians and cyclists moving between the fast-growing riverside development at Northshore Hamilton and the CBD.

The 80-metre arch will cross Breakfast Creek to connect Newstead Park with the existing Lores Bonney riverwalk which was part of the now completed Kingsford Smith Drive upgrade.

“This is a crucial step towards securing the final approvals we need to commence work on the green bridge that will provide a $67 million investment in local industry, deliver a new active transport options and create 140 local construction jobs,” Schrinner said.

“The Lores Bonney Riverwalk is currently used 2300 times a day, and this new green bridge will improve safety and increase capacity to the riverwalk by creating a continues walking and cycling connection.”

He said the Breakfast Creek project would join the now-approved Kangaroo Point green bridge as fast-tracked investments to create jobs as the city headed out of the coronavirus pandemic.

Brekky Ck

The council has also linked the project to the 2032 Olympics, saying it will be a “key connector” for the planned Athletes Village at Hamilton and provide a critical transport link for the Games.

Two other cross-river pedestrian and cycle links connecting Toowong to West End and St Lucia to West End remain on the council’s green bridge program books but are yet to be funded.

The council insists the remaining bridges need federal and state government funding to go ahead.


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Green ‘Grand Central’: Cross River Rail unveils changes to parklands vision

Cross River

Developers of Queensland’s biggest infrastructure project, the $5.4 billion Cross River Rail, appear to have bowed to public pressure and moved to preserve more public space in its redesign of the city’s Roma Street parklands precinct.

The Cross River Rail Delivery Authority has confirmed it will allow more public open space in a revised development plan for the area.

A new development scheme for the Roma St precinct, which will contain the state’s most most important transport interchange (dubbed Grand Central) as well as the proposed Brisbane Live arena, identifies new green areas and more affordable housing than was originally planned.

The Palaszczuk government has insisted that the development of an underground Roma St station as part of Cross River Rail is a chance to revitalise an under-used part of Brisbane into a major opportunity for private investment.

The government expects that over the next 15 years there will be nearly 4200 new residents and more than 19,700 new workers within the 32 hectare Roma Street priority development area, bounded roughly by Wickham Terrace, North Quay and College Rd.

However, the delivery authority came under fire for giving over part of the Roma St parklands which houses a public car park and Brisbane City Council maintenance depot to residential and commercial development.

The authority now says under the finalised development scheme the precinct would have more “publicly accessible open space”.

“The existing 11 hectares of publicly accessible open space within the Roma St Parklands will not only be protected forever, but will be expanded even further by more than two hectares,” the authority said in a statement.

“The development scheme also provides for new social and affordable housing as part of new residential buildings parallel to the rail corridor, adding to the existing apartment complexes along Parkland Boulevard.”

“This scheme is all about renewing one of Brisbane’s most underutilised inner-city locations while protecting and enhancing the beautiful natural features that already exist. ‘

About 46,000 people each weekday are expected to use the new high-capacity underground station at Roma Street by 2036.


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Brisbane Olympics to Push Property Market’s Limits


Brisbane house prices will hit the $1-million median well before the 2032 Olympics with suburbs near venues tipped to move up to $3.9 million.

Property projections from PRD Research indicate the median price would reach $1.7 million by 2033 and would be “immensely” boosted on the Gold and Sunshine coasts.

PRD chief economist Diaswati Mardiasmo said it was clear that hosting major events had served the property market well.

“The year after the 2000 Sydney Olympics, Newington (site of the athletes’ villages) and surrounding suburbs’ median house prices grew by 13.4 per cent,” Mardiasmo said.

“Median house price growth was not limited to the year after the Olympics. It grew by 38.5 per cent two years after, and 66.4 per cent three years after.

“The year after World Expo 88, South Bank and its surrounding suburbs grew by an average of 19.1 per cent and by 10.3 per cent after G20 Summit 2014.”

Brisbane property price predictions: Olympics 2032

Suburb 2011 2021 Projected Growth G20 Average
Hamilton house $824,000 $1,650,000 $3,990,670
Tennyson house $515,000 $970,000 $2,052,520
Chandler house $1,040,000 $1,600,000 $3,385,600
Woolloongabba house $623,000 $951,000 $2,012,316
South Brisbane house $805,000 $1,210,000 $2,560,360
Redland Bay house $450,000 $638,000 $1,350,008
Ipswich house $325,000 $435,000 $1,052,086
Herston house $697,000 $908,000 $1,921,328
Spring Hill house $950,000 $1,150,000 $2,433,400
Coomera house $353,000 $550,000 $1,163,800
Broadbeach units $463,000 $625,000 $1,322,500
Alexandra Headland house $570,000 $1,110,000 $3,348,760
Twin Waters house $651,000 $1,077,000 $2,278,932

^Source: PRD Research, AMP Pricefinder

“Bearing in mind the 2032 Olympics are still 11 years away, and based on how the Brisbane market is travelling, the potential to eclipse this price point is high,” Mardiasmo said.

“Regardless of the calculation method, the conclusion points us to Brisbane becoming a $1-million median house price city sooner rather than later. ”

Domain’s latest house price report showed median house price in Brisbane was $678,236, up 13 per cent annually.

Meanwhile, prices on the Gold Coast and Sunshine Coast hit $792,000, up 18.2 per cent on last year, and $825,000 up 23.1 per cent, respectively.

Domain chief of research Nicola Powell said at the moment, low listing numbers and interstate migration were driving the price hike.

“It suggests that upgrading homeowners are fuelling house prices, as well as interstate and expat buyers moving from more expensive cities,” Powell said.

Melbourne and Canberra officially joined Sydney in the $1-million home club in the July results.


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