Charter Hall offers stakes in Brisbane and Canberra assets via new trust for wealthy investors

Funds house Charter Hall is seeking to capitalise on the return of investors to office markets with the launch of a $147m trust that will hold stakes in its buildings in Brisbane and Canberra.

A stake in the Louisa Lawson Building in Tuggeranong is part of Charter Hall’s latest trust.

Funds house Charter Hall is seeking to capitalise on the return of investors to office markets nationally with the launch of a $147m trust for wealthy investors that will hold stakes in its buildings in Brisbane and Canberra.

It has launched the Charter Hall Office Trust No.3, which will own interests in two A-grade office towers alongside existing funds run by the company. The new vehicle will hold interests in 900 Ann Street in Brisbane’s Fortitude Valley, where it will take a 50 per cent interest, and the Louisa Lawson Building in Tuggeranong in the ACT, where it will take a 24.9 per cent interest.

The portfolio is being acquired from other Charter Hall vehicles for $147.1m on a capitalisation rate of 7.3 per cent. The new trust is billed as a chance to invest near the bottom of the cycle pricing, with falling interest rates and tightening future supply offering the potential for capital growth.

Like other office trusts that have launched in this part of the cycle, the assets are being acquired at well below replacement cost and peak valuations. The assets will be co-owned with other Charter Hall funds and the manager is seeking to raise about $77.4m from wholesale clients.

The Fortitude Valley asset is a 14-level A-grade office tower with large floor plates layout suited to the Brisbane market. The prime tower spanning 19,230sq m is fully occupied by Australia’s largest rail freight operator Aurizon.

Charter Hall’s Core Plus Office Fund and Direct Office Fund worked with Consolidated Properties Group in securing Aurizon for the Brisbane office building in 2015. The building cost about $170m at the time.

The Louisa Lawson Building was purpose-built for the federal government Department of Human Services, now known as Services Australia. The 26,050sq m complex was bought as part of a $780m office portfolio in 2021.

The combined portfolio is fully occupied and has 3.4 per cent weighted average annual rent reviews, with a six-year weighted average lease expiry.

Charter Hall has called out the “flight to quality” in office markets and that prime assets are benefiting most from strong tenant demand and the challenged future supply pipeline. It told prospective investors that Brisbane and Canberra office markets were expected to benefit from strengthening economic conditions.

Forecasts for Queensland and the ACT are higher than the national average over the next three years and drivers include increased government and infrastructure investment, such as the Brisbane 2032 Olympic and Paralympic Games.

Over the two years to the end of March, the leased space across the prime Brisbane and Canberra markets increased by 8.3 per cent, higher than the national average of 4.7 per cent. Vacancy rates across the Brisbane and Canberra markets are already among the lowest in the country and half the national average.

“The projected tenant demand coupled with the downward trajectory of supply should be constructive for solid rental growth across the Brisbane and Canberra office markets,” the fund manager said.

The company has previously tapped wealthy investors. Last year it launched the unlisted Charter Hall Office Trust No.2 as a fixed-term unlisted property partnership invested in two core prime office assets. That $315m prime city office partnership holds half interests in two major towers in Brisbane and Adelaide.

It took a 50 per cent interests in Brisbane’s 275 George Street and 2-10 Franklin Street, Adelaide.

Originally published as Charter Hall offers stakes in Brisbane and Canberra assets via new trust for wealthy investors