Charter Hall targets Martin Pl venture with super fund REST

Under the deal, Charter Hall would set up a venture with super fund REST to own and manage a landmark Sydney CBD tower.

Channel 7 signed off from 52 Martin Pl for the final time last month. Picture: Nikki Short

Property funds giant Charter Hall is targeting a major Sydney CBD office deal that would allow it to set up a venture with superannuation fund REST to own and manage a famed Martin Place tower.

They are in talks about a transaction under which a Charter Hall-managed vehicle would emerge with a stake in 52 Martin Pl.

Macquarie is developing two towers above the new Metro station and other landlords have capitalised on the area’s elite status, drawing tenants even as the broader market slows.

The building was once the home of Channel 7’s breakfast show Sunrise, but the building is mostly leased to the NSW government for about 30 years.

The television network signed off from Martin Pl for the final time last month, creating the opportunity for some new additions.

The site is protected from the problems facing office landlords due to its exceptionally long government leases, and could be overhauled in future.

While the parties would not discuss the transaction, Charter Hall has a track record of acquiring key sites and undertaking transformative developments.

Notably, its funds have bought into one of Sydney’s most prestigious office buildings, Chifley Tower, alongside Singaporean sovereign wealth fund GIC, and it is now advancing plans for its 41-storey Chifley South addition which has precommitments for more than 30 per cent of the space.

Charter Hall has maintained its belief in the prime end of the office market even as lower-grade buildings come under pressure. The group has been taking bids on one asset – 333 George St, also in Sydney – and interest in that building is described as deep.

Despite the dramatic shift towards hybrid working styles, particularly among technology companies, corporate Australia is moving back to offices. The major banks, in particular, are seeking to implement return-to-work policies.

Top class towers are likely to fare the best in this environment and landlords are positioning their properties to benefit from the shift.

At the same time, superannuation funds have been reassessing their property assets, and some have taken markdowns.

Very few large offices and malls have sold recently, prompting questions about their value as shifting interest rates reset the market.

REST is one of the biggest superannuation funds in the country and has a large property portfolio.

It last year attempted to sell a building in Melbourne’s Docklands for close to $500m but that office complex did not sell amid a wave of sale campaigns that were sidelined as interest rates were increased.

The superannuation fund could be looking to bring in a top class property partner in order to realise the underlying value of the site. The move could also generate some returns to the fund, which picked up the tower in 2014 from Queensland investment body QIC for $555m.

Like many superannuation funds, REST bought relatively early in the property cycle and is well insulated from any falls that are hitting the market.

The parties declined to comment on Friday.