Charter Hall Group and PSP Investments announce further partnership

Charter Hall Group and the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers, have extended their 11-year relationship to acquire a development project under construction in Brisbane.

The property, located at 31 Duncan Street within the fringe Central Business District (CBD) Fortitude Valley precinct, comprises a 25,000m² office development and a major 464 bay public carpark, currently under construction by national contractor Hutchinson Builders. The vendor has secured 70% leasing pre-commitments and will provide a rent guarantee over the balance of the space, with subsequent secured lease terms determining the final cost of the investment to the Charter Hall partnership.

The vendor is a private partnership that purchased the public carpark several years ago, gained planning approval for a new office building constructed above the carpark and secured several pre-commitments to bring total pre-leasing to approximately 70% of forecast income on completion. The vendors include Brisbane property identities Andrew King and Tim Mahony. Committed tenants include Urban Utilities, CS Energy, Hutchinson Builders, RPS, CoreLogic and Secure Parking.

Due for completion in December 2022, the new office building will be multi-tenanted and is located within 200 metres of the Fortitude Valley train station and within convenient walking distance to nearby retail and hospitality amenities, and the CBD.

The building offers a range of sustainability features, including natural ventilation and operable windows, as well as efficient plant and equipment which support the building in achieving its target design ratings of NABERS Energy 5.0 star and NABERS Water 4.0 star at completion. The building will be powered by 100% grid supplied renewable electricity, supporting a shared commitment by the partnership in taking climate action and contributing to a global low carbon economy.

“Large 2,000m² floor plates, retail facilities and high-quality end-of-trip facilities combine to provide an excellent investment proposition,” said David Harrison, Charter Hall Group Managing Director and CEO.

Mr Harrison noted that “Charter Hall and PSP Investments have partnered for over 10 years on various investments in Australia, including the following partnerships:

• Charter Hall Office Trust (CHOT) – a national $3.75 billion prime office portfolio.
• BSWF Partnership (BSWF) – a $1.3 billion prime office portfolio.
• 242 Exhibition Street partnership – the $930 million Telstra global HQ located in Melbourne CBD.
• Development and subsequent divestment of the $250 million BOQ anchored office building in Newstead.
• Investment and subsequent divestment of an interest in the $200 million Bateau Bay shopping centre.”

“We are pleased to extend our long-term relationship with Charter Hall and look forward to expanding our real estate investments in Australia,” said Stéphane Jalbert, Managing Director, Head of Asia-Pacific and Europe, Real Estate Investments, at PSP Investments.

“We have invested in the Australian real estate market for over 10 years and look forward to exploring further opportunities that respond to evolving needs in terms of building flexibility and sustainability, while also offering an attractive risk-adjusted return.” 

Practical completion of the development is scheduled for late 2022, whilst settlement of the acquisition will take place in February 2022, having secured Foreign Investment Review Board approval.