Charter Hall acquires 50pc stake in Coles headquarters

The property group has acquired 50 per cent of the site in Melbourne that currently houses the headquarters of Coles.

The national headquarters of Coles is in Melbourne’s Hawthorn East.

Charter Hall has acquired 50 per cent of the building that currently houses the headquarters of supermarket giant Coles.

The ASX-listed group (CHC) said it paid $140.5 million to Investa Office Fund (IOF) for the stake, noting Coles had recently signed a long-term lease tying itself to the Melbourne property until 2030.

The remaining 50 per cent of the building is owned by a private group, Charter Hall said.

Pricing on the transaction represents a yield of 5.8 per cent given annual rent of $15,820,542.

Charter Hall said it expects to close the deal through a managed fund in the March quarter, while it has enhanced a debt facility with lender Westpac to give it more headroom.

“Should the asset not be settled in the March 2017 quarter by a Charter Hall managed fund, the Group would use cash and debt to settle the acquisition which would be slightly accretive to the Group’s operating earnings and WALE in FY17, however the intention is to have a managed fund complete the transaction,” Charter Hall managing director David Harrison said.

“In order to maintain investment capacity, the group has extended its headstock Westpac debt facility to $200m to accommodate the possibility of the transaction being settled by the group.”

At 10.35am (AEST), Charter Hall shares rose 0.5 per cent to $5.255, while Investa Office Fund shares inched up 0.1 per cent to $4.415.