Joint owners Investa Commercial Property Fund (ICPF) and Oxford Investa Property Partners (OIPP) today announced the sale of 242 Exhibition Street, Melbourne for A$830 million to Charter Hall, Charter Hall Prime Office Fund and PSP Investments (together ‘Charter Hall’). ICPF and OIPP each own a 50% stake in 242 Exhibition Street, originally acquired by ICPF in 2006.
The A-grade office building incorporates 65,913sqm of net lettable area, including 2,542sqm of retail, with a 11.5-year WALE and Telstra occupying 100% of the office tower. The building recently underwent a $17 million upgrade to the lifts and base building areas.
Charter Hall secured 100% of the asset following an off-market process. Traded at an opportune point in the cycle, the sale was at a 17% premium to book value, delivering a material boost to ICPF’s total earnings.
Jason Leong, Fund Manager, ICPF said: “We’re very pleased with the strong sale outcome of 242 Exhibition Street, Melbourne, for ICPF investors. Capital markets continue to be buoyant, with cap rates near record lows on an historical basis. As one of Melbourne’s most prominent A-grade office buildings, its long WALE and strong lease covenant make it a very attractive investment proposition”.
Proceeds of the sale will be reinvested into ICPF’s active development pipeline including 60 Martin Place, Sydney as well as future acquisition opportunities.
ICPF’s portfolio of 15 office assets is valued at more than $5.4 billion and includes interests in some of Australia’s leading office buildings, including 420 George Street, Sydney, Deutsche Bank Place at 126 Phillip Street, Sydney and 567 Collins Street, Melbourne.