Charter Hall $725m capital raise “significantly” oversubscribed

Charter Hall $725m capital raise “significantly” oversubscribed

18 October 2019

Charter Hall’s main industrial property fund has highlighted the strength of demand for major facilities exposed to the logistics and e-commerce boom by raising $725 million of equity.

The offer by the Charter Hall Prime Industrial Fund (CPIF) was “significantly” oversubscribed and could spark further offerings by rival groups looking to expand in the hot sector.

Charter Hall chief executive David Harrison said that with global bond yields remaining at multi-year lows, investment conditions were favourable for real assets, and capital was being deployed for local industrial property.

“We are seeing continued demand from investors who are seeking investment managers who have a proven strong track record and origination capability to provide access to high-quality core real estate, particularly in the industrial and logistics space,” Mr Harrison said.

The raising was supported by existing and new investors from Australia and offshore.

“A lot of domestics are probably overweight in retail and trying to re-weight that,” Mr Mason told The Australian Financial Review on Wednesday.

“That’s what’s driving a lot of demand for logistics.

“Global investment conditions remain very favourable for the Australian commercial property market, which is competitive for high-quality, long-leased investment assets.

“The raising demonstrates Charter Hall’s ability to source capital from the unlisted market and marry that equity with high-quality investment opportunities in the industrial logistics sector.”

“Record infrastructure spending on road and rail, combined with rising e-commerce and companies seeking supply chain efficiencies through new highly automated facilities, is driving the demand for logistics premises, particularly in Sydney, Melbourne and Brisbane,” said Richard Mason CPIF fund manager.

“At the same time, supply of modern logistics facilities is low, pushing vacancy rates lower and rents higher.”

They were drawn to the expanding portfolio and attractive five-year forecast income total returns, underpinned by a ­substantial weighted average lease expiry of 10 years, and weighted average annual rental reviews of 3 per cent.

The raising strengthened CPIF’s balance sheet and provides further capacity to fund acquisitions and for new build to core facilities.

The raising gives the fund the capacity to grow to more than $5 billion, cementing its position as one of Australia’s largest unlisted property funds.

CPIF’s $3.9bn industrial and logistics portfolio comprises 63 assets, with 85 per cent of the portfolio by value in the key land-constrained eastern seaboard markets of Sydney, Melbourne and Brisbane.