Charter Hall Group (Charter Hall or the Group) today announced that its $9 billion Charter Hall Prime Office Fund (CPOF) has acquired a 100% freehold interest in 383-395 Kent Street in the Sydney CBD for $385 million, reflecting an initial passing yield of 5.1%.

The acquisition presents a core Sydney CBD investment opportunity on a large approximately 3,600 square metre (sqm) CBD site benefitting from two street frontages and high valuer assessed land value component.

Recognised as a “tower cluster site” under the latest planning controls, the site is strategically significant as it allows for long-term development optionality and floorspace expansion potential of the existing buildings, which includes approximately 18,000sqm of office space plus a multi-level, approximately 800 bay public car park.

Located adjacent to CPOF’s 40,000sqm 2 Market Street office complex and situated on a large strategic corner site, 383 Kent Street provides large existing floor plates of more than 1,500sqm, 4 elevations of natural light and expansive views across Darling Harbour and the CBD.

With 100% occupancy, current leases include major tenants such as Grant Thornton, InterSystems Australia and Mott McDonald, with Wilson Parking operating the building’s public carpark.

CPOF Fund Manager, Matthew Brown, said, “This strategic acquisition builds on CPOF’s portfolio of prime CBD assets, with multiple expansion and redevelopment options. This transaction supports our strategy to acquire high quality modern assets where we can successfully create major CBD precincts given its prime location.”

Charter Hall Office CEO, Carmel Hourigan, said, “Post completion of this acquisition, the CPOF portfolio will grow to $9 billion and will continue to cultivate its develop to core strategies, with current developments under construction or in planning phases within four major CBD markets, pre-committed to major customers such as Amazon, Australia Post and the Commonwealth Governments Services Australia.”

Dexus Chief Investment Officer, Ross Du Vernet said: “This transaction is in line with our strategy of recycling out of some core properties and reinvesting into higher returning opportunities including our sizeable development pipeline. This result demonstrates continued investor demand for quality office properties in core markets.”