Southern Cross Towers

Address	Southern Cross Towers, 121 Exhibition Street (East Tower) and 111 Bourke Street (West Tower), Melbourne, Australia
Property type	Office
NLA (sqm)	125,730
Seller	Brookfield & Blackstone
Buyer	Charter Hall Prime Office Fund
Deal Structure	50% interest

Blackstone appointed Cushman & Wakefield to manage the sell-down of a 50% interest in Southern Cross Towers in Q3, 2021. At the time Melbourne was subject to stage 4 lockdowns due to COVID-19, prohibiting international investors travelling to Melbourne for inspections. Blackstone utilised Q3 & Q4 2021 to prepare the assets for sale. During their preparation consultation with co-owner and asset manager Brookfield, it resulted that Brookfield were to include their 50% of the East Tower in the offering. Travel restrictions were not fully lifted until early 2022 at which time the campaign commenced. 

Whilst the capital markets were still favourable during the early stages of the campaign, sentiment deteriorated as the outlook for funding costs increased throughout February and March 2022. Further softening of the global financial environment posed additional challenges for the bidding stages. 

Southern Cross Towers are the only two buildings in the CBD above 40,000 sqm NLA that are primarily leased to Government or Government business enterprise tenants. The Australian Postal Corporation’s lease expiry in November 2024 provides a unique opportunity to reposition an icon of the Melbourne CBD. Cushman & Wakefield leveraged these unique features to limit the impact of the changing market on buy-side pricing.

Charter Hall Prime Office Fund (CPOF) ultimately executed on the acquisition of a 50% interest in the towers for $1.025Bn.

Charter Hall Office CEO Carmel Hourigan said: “The acquisition of Southern Cross Towers demonstrates the success of Charter Hall’s strategy — to expand our office footprint and offer best-in-class workplaces experiences. With a site area of almost 9,000 sqm, the scale of the Southern Cross precinct complements CPOF’s portfolio of other large-scale assets including the Wesley precinct and 555 Collins Street in Melbourne CBD, together with Sydney’s iconic Chifley Square.”

“We will work with Brookfield to re-lease the West Tower upon relocation of Australia Post in 2025 and look to further enhance the amenity offered by the complex,” said Ms Hourigan.