Charter Hall Prime Office Fund has bought a 50% stake in the Southern Cross Towers precinct in Melbourne’s CBD from Brookfield and Blackstone.
Situated at the ‘Paris end’ of the CBD, the 111-121 Exhibition Street corner precinct had frontages to Exhibition, Little Collins and Bourke streets.
The east and west towers comprised 126,000 sqm of office space and were fully leased to government and corporate tenants.
The east tower offered almost 80,000 sqm across 37 levels and was tenanted by the Victorian Government with a weighted average lease expiry (WALE) of six years.
The 20-storey west tower had 45,000 sqm of net lettable area and was anchored by Australia Post, which planned to relocate to a new building in Richmond in 2025.
The complex also had minimum 5-star NABERS ratings on energy, water and Green Star ‘as-built’.
Brookfield Managing Partner and Head of Australian Real Estate Sophie Fallman said premium, well-positioned workplaces remained in high demand from tenants, retailers and investors alike.
“Since developing the assets, Brookfield has added significant value to Southern Cross Towers, including the recent seven-year lease with the Victorian Government and upgrades to the East tower,” Fallman said.
Charter Hall Office CEO Carmel Hourigan said they would work with Brookfield to re-lease the West Tower upon relocation of Australia Post in 2025 and look to further enhance the amenity offered by the complex.
“With a site area of almost 9,000m², the scale of the Southern Cross precinct complements CPOF’s portfolio of other large-scale assets including the Wesley precinct and 555 Collins Street in Melbourne CBD, together with Sydney’s iconic Chifley Square,” Hourigan said.
Charter Hall Managing Director and Group CEO David Harrison said the Southern Cross acquisition up-weighted the fund’s Melbourne CBD portfolio within the ‘Paris End’, enhancing their exposure to modern assets with government tenants, which had been two of the group’s strategic thematics that they continued to favour.
“The CPOF portfolio now comprises $9 billion of our $25 billion office platform, and we are proud of CPOF’s leading position, commanding the highest performance ranking in the MSCI wholesale office index over all time periods from one to ten years,” Harrison said.
Recent Melbourne office deals include CDL and HThree City Australia’s purchase of the A-grade office tower at 330 Collins Street for $236 million earlier this month.
In February, Singapore-listed Straits Trading Company bought two office buildings in Docklands for $150 million, and Hong Kong-listed Link REIT entered into a $596 million deal with Oxford Properties to invest in an office portfolio including the 567 Collins Street building in the Melbourne CBD.
CBRE and Cushman & Wakefield negotiated the deal.