Charter Hall grabs half of Coles headquarters

Charter Hall has bought half of Coles’ head office in Melbourne.
Charter Hall has bought half of Coles’ head office in Melbourne.

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

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

The remaining 50% of the building is owned by a private group, Charter Hall says.

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

Charter Hall says 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 says.

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

Charter Hall shares rose 0.5% to $5.255 on Wednesday morning, while Investa Office Fund shares inched up 0.1% to $4.415.

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