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Charter Hall inks A$108.5M deal with Oxford Properties to buy Telstra HQ

Charter Hall Group's Charter Hall Long WALE REIT agreed to pay A$108.5 million for the acquisition from Oxford Properties Group Inc. of the office building at 16-18 Mort St. in the Civic area of Canberra, Australia.

The property is primarily occupied by Telstra Corp. Ltd. and will serve as the Australian telecommunications company's headquarters for a remaining lease term of 6.6 years at the time of the transaction's completion.

Oxford Properties is selling the Telstra Canberra Head Office as part of the A$1.5 billion portfolio that it took ownership of after taking over Investa Office Fund. The building has a net lettable area of 14,506 square meters and was reported to have piqued the interest of Elanor Investors Group and Growthpoint Properties Australia.

Aside from the Telstra headquarters, the real estate investment trust also entered into separate agreements to acquire a 50% stake in the Brisbane City Council Bus Network Terminal in the Eagle Farm suburb of Brisbane, Australia, for A$51.3 million and Thales Group's head office in Sydney for A$46.2 million.

To partially finance the aggregate A$206 million consideration for the agreed transactions, Charter Hall Long WALE is planning to conduct a A$180 million fully underwritten institutional placement and a non-underwritten security purchase plan to further raise up to A$10 million. J.P. Morgan Securities Australia Ltd. and the Australian branch of UBS AG are the underwriters of the institutional placement, according to a news release.

After taking into consideration the potential impacts of the property acquisitions, as well as the institutional placement and security purchase plan, the REIT reaffirmed its operating EPS guidance for fiscal year 2019 of 26.9 Australian cents. Furthermore, the trust also predicted an annual improvement of at least 3.75% in its operating EPS for financial year 2020.