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Charter Hall mulls $300m stake in Allianz Centre

March 14, 2018

Fund manager Charter Hall is considering taking full control of the Allianz Centre in Market Street, Sydney, by acquiring the $300 million half-stake held by its co-owner.

Allianz is planning on putting its own half-stake to the market – it has appointed JLL to broker it – but must first offer that ownership to Charter Hall by virtue of its co-owner’s pre-emptive rights.

The fund manager, which is led by David Harrison, is thought to be seriously considering the opportunity to acquire a large piece of prime commercial property before it hits the open market.

“Charter Hall declines to comment on market speculation,” a spokesperson said.

The 50 per cent stake in 2 Market Street it already controls sits in the Charter Hall Office Trust, an unlisted $2.7 billion vehicle that holds 10 properties.

The Market Street building is an A-grade tower. It is fully occupied and its major tenants are Allianz, Caltex and Commonwealth Bank of Australia. The average lease expiry is 4.4 years.

Rising to 24 levels, the tower has more than 40,000 square metres of office space. Floors plates are typically close to 2000 square metres.

If a deal goes ahead, Charter Hall may not necessarily absorb the remaining stake into the same fund.

Charter Hall has been active in the Sydney market recently. Just before Christmas the Charter Hall Prime Office Fund purchased a commercial office building overlooking Hyde Park for about $340 million from Chinese investor Bright Ruby on a yield of 5.15 per cent.

The fund has been adding to its firepower recently, with a first-close equity raising of $340 million in December that last year that it can apply to its $1.5 billion development pipeline and strategic acquisitions.

The unlisted fund’s base includes Australian, South Korean and European investors.

The fund expects to complete the balance of its overall target of $500 million in capital raising during the 2018 financial year.

Sydney’s market has been running hot, such as the recent sale of 130 Pitt Street for $229 million to PA Realty, a joint venture between CLSA Real Estate and Mitsubishi Estate Co, on a yield of 3.7 per cent.

In November, Hong Kong-based Early Light International Group, backed by billionaire toy maker Francis Choi, bought Blackstone’s 1 Castlereagh Street tower for about $220 million.

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