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E-Commerce Fuels Charter Hall’s $725m Capital Raising

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Online retailing is proving a major demand driver for logistics space with developer and fund manager Charter Hall closing a, significantly oversubscribed, $725 million capital raising.

Record infrastructure spending on road and rail, combined with rising e-commerce and companies seeking supply chain efficiencies through new highly automated facilities has peaked demand for logistics premises particularly in Sydney, Melbourne and Brisbane.

Many domestic institutions are currently looking to remix their portfolios in an attempt to reduce exposure to anaemic retail property as the growing demand for e-commerce facilities continues to be bolster the industrial sector.

Following the entry of Amazon to Australia last year key property holdings landlords have turned their attention the growth in demand for logistics facilities.

▲ CPIF’s current $3.9 billion industrial and logistics portfolio comprises 63 assets, with 85 per cent of the portfolio by value in the key land constrained and high performing Eastern Seaboard markets of Sydney, Melbourne and Brisbane.
▲ CPIF’s current $3.9 billion industrial and logistics portfolio comprises 63 assets, with 85 per cent of the portfolio by value in the key land constrained and high performing Eastern Seaboard markets of Sydney, Melbourne and Brisbane.


Domestic institutions have now committed to Charter Hall's Prime Industrial Fund (CPIF) in droves underpinned by a substantial weighted average lease expiry of 10 years, strong weighted average annual rental reviews of three per cent and resilient tenant covenants with 93 per cent leased.

The capital raising, which gives the $3.9 billion fund with target gearing of 30 per cent the capacity to grow to more than $5 billion in size, shows a sector steadily buoyed by investors looking for better returns in a global environment of low interest rates.

Charter Hall managing director David Harrison noted that with global bond yields remaining at multi-year lows, investment conditions were favourable for real assets and capital was continuing to be deployed into the Australian industrial property market.

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

“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.”

Led by David Harrison, Charter Hall's industrial development pipeline is expected to deliver over 650,000sq m of new core logistics facilities with an anticipated value on completion of $1.2 billion.

The fund manager has also acquired high-profile locations such as the Metcash regional distribution centre in Brisbane, the Coca-Cola production facility in Perth and Bombardier’s Australian headquarters in Melbourne.

In a recent high-profile move, GPT signalled an intention to shift its investment focus into logistics while reducing its overall exposure to the softening retail sector.

Earlier this year, GPT recently swooped on a group of three Sydney facilities being divested by AMP Capital for as much as $120 million.

Those properties had made one half of a six-asset portfolio acquired from JPMorgan in 2016 for $250 million for the AMP Capital Diversified Property Fund, on a yield of about 6.5 per cent.

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Article originally posted at: https://theurbandeveloper.com/articles/e-commerce-prospects-fuel-charter-halls-725m-capital-raising