The Wyllie Group has sold a stake in its flagship Perth CBD office building for $61.5 million to Charter Hall.
The transaction is the second purchase in a month for Charter Hall. Late last month, the group bought the Hatch Building in Perth and an adjoining site for $37.25 million.
Yesterday, the Wyllie Group agreed to sell a 50% interest in St Georges Square, an A Grade office building.
Located at 225 St Georges Terrace, the 19 level property comprises 21,500 sqm of office space and 373 car park bay. The property has 1,165 sqm typical floor plates and excellent views over the Swan River. In addition, the building is located opposite Woodside and QV 1.
St George Square is predominantly leased to BHP Billiton, with other tenants including Commonwealth Bank, Bendigo Bank, Wilson Parking and various whole floor and part floor tenancies.
The average net passing office rent of $250/ sqm is considered well below current market levels. Importantly, almost all tenancies provide for market rent reversion opportunities over the next 3 financial years.
Charter Hall has entered into a conditional subscription agreement with Wyllie Group, where Wyllie will receive $35.5 million in cash and 18 million Charter Hall Group securities at a deemed subscription price of $1.44.
Charter Hall’s joint chief executive David Harrison said the group will offer the purchase opportunity to its Core Plus Office Fund investors for $61.5 million, otherwise Charter Hall Property Trust will proceed with the acquisition.
“Given the property’s current rents are considered to be substantially under current market levels and reversion opportunities over the whole building become available over the next 3 years, we believe the strong distribution yield growth profile provides a compelling investment for both CPOF and Charter Hall Property Trust investors.
“As the property was not available for purchase as 100% cash consideration purchase, the current structure has been agreed in an off market transaction,” Harrison added.
Should CPOF investors elect to proceed with the purchase, approximately 50% of CPOF committed equity will have been allocated since CPOF’s first close in June 2006.
Should CPOF proceed with the acquisition, a cash component will be payable to the vendor by CPOF and $26 million will be paid to Charter Hall Property Trust as consideration for the securities issued to the Wyllie Group.
“Our objective was to achieve much more than investment diversification,” Wyllie Group’s managing director Melissa Karlson said.
“We are interested in future growth opportunities that will arise from forming a strong strategic partnership.
“We believe Charter Hall Group is well positioned for long term growth and has a passionate and highly qualified team,” he added.
The deal is subject to Charter Hall completing property due diligence to its satisfaction by early October, 2006 and the parties obtaining any necessary consents required for the assignment of a 50% leasehold interest in the building.
By Adam Parsons
