Blackstone, Brookfield expect $2.1b from Charter Hall & GIC for Melbourne offices

Melbourne’s Southern Cross office complex is set to be sold to Charter Hall and GIC for c$2.1 billion – reflecting a bullish 4.5% yield.

The investment contains two A-grade commercial towers;

• SX1, – which provides 76,900sqm of lettable area across 39 floors – occupied by the Department of Justice and Regulation, Jobs Precincts & Regions, and the State Revenue Office, and
• SX2 – which provides 45,200sqm of lettable area across 22 floors – occupied by Australia Post and the Energy & Water Ombudsman.

The Southern Cross asset covers a site bound by Bourke, Exhibition and Little Collins streets, and Southern Cross Lane and was developed 2004 by Brookfield, who sold down a 50% interest in the tower to Blackstone for $675 million in 2016.

The transaction with Charter Hall is being brokered by Cushman & Wakefield and CBRE.

The Southern Cross asset is expected to be held on behalf of GIC by the Charter Hall Prime Office Fund, which would control 30 properties, many backed by government occupiers, worth a total of c$10.8b.

A formal statement from the parties is yet to be made.