Charter Hall seizes Collins Place freehold in off-market play

In an off-market play, the property group has secured one of Melbourne’s grandest complexes in a move that could set it up to be part of a longer-term redevelopment.

Property group Charter Hall has dealt itself into the future of one of Melbourne’s grandest complexes – Collins Place in the heart of the central business district – with a fund it manages spending about $65m on the site’s freehold.

The company picked up the interest in an off-market play from a major institution and could be in a position to do a deal with the leaseholder, the AMP Wholesale Office Fund, in coming years.

The Charter Hall Prime Office Fund acquired the freehold interest in Collins Place – the top-class office, entertainment and hotel precinct in the highly coveted Paris end of Melbourne’s CBD – but the leasehold has about 107 years to run.

Collins Place is a 13,350sq m site, comprising two skyscrapers – 35 and 55 Collins St – which include about 100,000sq m of A-grade office space plus the Sofitel Hotel.

However, at a plot ratio of only 10:1, it appears to be well below its floorspace potential with other major sites having achieved over 20:1 including 80 Collins Street and Charter Hall’s 555 Collins Street which achieved 86,000sq m of approved floorspace equating to about 24:1 plot ratio.

The precinct also has more than 470 metres of street frontages to up-market Collins and Exhibition Streets and Flinders Lane.

CPOF bought the Collins Place freehold title after a process undertaken by Adam Woodward of Colliers on behalf of the vendor.

The leasehold of Collins Place is the largest single asset in the AMP Wholesale Office Fund, which rival developer Mirvac is due to take control of after a management rights tussle with AMP Capital being purchased by Dexus.

Inside 35 Collins Place. Picture: Supplied.

Charter Hall has been a major player in recent Melbourne property deals and CEO David Harrison said that Collins Place “presents a unique opportunity for CPOF investors to secure one of the largest, freehold title, prime CBD sites nationally”.

“This extends the large precinct holdings owned by CPOF which includes Chifley in Sydney, together with two other Paris end Melbourne CBD precincts in the 10,000sq m Wesley site and recently purchased 9,000sq m Southern Cross Towers,” he said. The Charter Hall fund has just taken a 50 per cent interest in that two tower complex alongside Brookfield and Blackstone.

Charter Hall has seized the advantage in buying up the freeholds of long term leasehold sites in earlier plays.

In 2019, it bought the freehold title of Sydney’s premium office precinct, Chifley Tower and subsequently acquired a joint venture interest in the leasehold form Singaporean investor GIC and took over management of the entire complex. Charter Hall has then advanced planning approvals to develop a complimentary South Tower to the existing North Tower.

“Charter Hall’s strategy, to unlock under-utilised floorspace in prime locations that have the potential to add value to the freehold asset over time, ultimately delivers long term value,” Mr Harrison said.

Charter Halls office fund CPOF has also recently sold a 50 per cent interest in the first stage of the $800m-plus 555 Collins Street Tower anchored by pre-leases to Amazon and aware Super to its long term partner GIC.

Charter Hall said that Collins Place was the largest CBD land holding in the Paris end of Melbourne, and the purchase added to its holdings that also include over 40,000sq m of CBD land at the Paris end of the CBD including the Telstra HQ at 242 Exhibition St.