Charter Hall has captured 555 Collins Street in the western core of Melbourne’s CBD.
The off-market acquisition of $140 million, was completed by Charter Hall’s $4.5 billion wholesale prime office fund (CPOF).
The property adjoins the CPOF-owned 55 King Street, forming a combined site of 4,620sq m and creating a strategic land holding on a major Melbourne CBD corner intersection for Charter Hall.
The building was expected to be demolished to make way for a Bates Smart-designed residential tower, but now seems set to be transformed into an office tower, adding to the spate of developments currently under way along Collins Street.
Previous owners, Fragrance Group, purchased the tower for $78 million in 2014 from Melbourne property developer and rich lister Harry Stamoulis.
Fragrance’s plans for a 82-level apartment, office and hotel complex to replace Enterprise House was rejected by planning minister Richard Wynne, prompting Fragrance to offer the site for sale.
“We see this investment, as an exciting opportunity to create and hold another landmark office tower providing our capital partners with access to sector leading institutional grade property investments,” Charter Hall Office chief executive Adrian Taylor said.
The site is centrally positioned within Melbourne’s financial district, with almost 50 metres of northern frontage to Collins Street and 100 metres of frontage to King Street.
The sale was negotiated by Knight Frank Australia directors Paul Henley and Scott Newton.
CPOF’s total office development pipeline will now expand to $2.7 billion, with $1 billion under construction and predominantly pre-leased.
CPOF fund manager Matthew Brown said the acquisition continued the funds strategy of acquiring sites in tightly held markets to expand the “develop to core” part of the investment strategy.
“Given the favourable Melbourne CBD office outlook as evidenced by record site sale prices such as 60 Collins Street and 150 Queen Street, we pursued this rare Collins Street corner site off market with the additional attraction of it adjoining our 55 King St property,” Brown said.
The fund has a weighted average asset age of approximately 8.2 years with 98 per cent of income from investment grade, government or nationally recognised tenants.