Sydney-based real estate fund manager Charter Hall Group has raised A$150 million (€123.2 million; $162 million) for its Core Plus Industrial Fund (CPIF) as it seeks to capitalise on a buying window afforded by Australia’s falling interest rates.
Charter Hall’s joint managing director David Harrison said the capital raising demonstrated how the fund’s investors had recognised now was a good time for investing in Australia’s institutional grade industrial real estate. Australia’s central bank left official interest rates at 4.25 percent – “close to their medium-term average” Australia Financial Press reported, following two rounds of cuts in November and December.
Harrison said: “These further investment commitments from domestic and international Charter Hall wholesale clients recognise the cyclical opportunity for acquiring investment grade industrial property in a falling interest rate environment combined with strong market fundamentals from low vacancy levels, limited new supply and stable tenant demand in most metropolitan markets.”
CPIF currently contains a portfolio of industrial properties, valued at approximately A$500 million, leased to occupiers including Coles, Woolworths, Volkswagen, Toll, Schenker and Smorgon Steel. The average lease term of the portfolio is 12 years. Charter Hall has A$53 million of co-investment capital in the portfolio also.
The equity raising follows A$200 million raised Charter Hall’s Core Plus Office Fund, announced in December. The value of the properties in that fund was approximately A$1.4 billion then. Harrison said: “The additional wholesale equity raised within CPIF, and the recent $200 million raised within our Core Plus Office Fund, enables Charter Hall to continue to build our capacity to source earnings and value accretive acquisitions and pre-leased developments.”
The capital raisings for Charter Hall’s core-plus property funds come as the Sydney-based manager relinquishes the lion’s share of its giant office REIT. It is currently participating in the privatisation of the Charter Hall Office REIT via a partnership with two state investment funds, The Government of Singapore Investment Corporation and Canada’s Public Sector Pension (PSP) Investment Board, which is slated to complete in March. That A$1.9 billion transaction – centering around the REIT’s Australian assets – comes in tandem with its sale of a portfolio of US assets within the same REIT to US firm Beacon Capital in a deal valued at A$1.7 billion. See this month’s PERE for detailed analysis of the take-private by Charter Hall, GIC and PSP.