Charter Hall Spends $66m on SPC Factory

Busy fund manager Charter Hall has outlaid $66 million for a food processing plant at Shepparton in rural Victoria, adding to its expanding logistics portfolio.

The 126,000sq m facility, two hours north of Melbourne, was sold by fruit and vegetable giant SPC.

The initial yield on the transaction is about 6.1 per cent, setting a fresh benchmark for the local market where prime deals have been rare.

The processing plant is on a largely unused 23.4ha site at Andrew Fairly Avenue, providing Charter Hall with development potential.

It was purchased with a 30-year triple-net lease and will be held in Charter Hall’s $2.5 billion Direct Industrial Fund No.4 (DIF4).

Chris O’Brien, Ben Hegerty and Andrew Bell from CBRE brokered the deal.

Charter Hall direct chief executive Steven Bennett said the acquisition fitted comfortably within DIF4’s strategy of buying quality industrial property near transport infrastructure coupled with strong tenant covenants.

“DIF4 continues to meet investor demand for high-quality exposure to the resilient and growing industrial and logistics property market,” Bennett said.

“[This] acquisition is consistent with the fund’s investment strategy, presenting a rare 30-year triple net lease, introduces a new tenant customer to the fund’s portfolio and enhances DIF4’s exposure to the non-discretionary food industry.”

Charter Hall noted the Shepparton acquisition would extend the fund’s weighted average lease expiry to 11.2 years at 100 per cent occupancy.

The DIF4 property portfolio includes the 21,000sq m Edinburgh Parks Distribution Centre in Adelaide, leased to poultry producer Inghams, and a 31,000sq m facility in south-west Sydney, leased to global logistics group Mainfreight.

In recent months, DIF4 has deployed over $375 million in acquisitions, providing investors access to leading national tenants including Cleanaway, Tesla, Bunnings and the federal government.

Charter Hall head of industrial development Andrew Simons told The Urban Developer the ASX-listed fund manager’s industrial arm was actively focusing on providing “last-mile” solutions in 2022.

“The standout [in 2021] has been the shift in mindset in the urgency of our tenant customers to adopt automation,” Simons said.

“Pre-Covid the general view was that automation was a good thing to acknowledge and possibly pursue.

“Post-Covid the mindset has changed to automation being something to consider as a priority noting the changing world and the benefits of scale, efficiency and flexibility automation can bring to their businesses.”

Simons said the renewed focus would require significant change to permitted land uses, a need to rethink strategies around zoning, permitted uses, hours of operation and concepts such as multi-level, high density warehousing.

“This will become critical to allow our cities to function effectively in the future,” he said.

The group’s managed portfolio of warehouse and logistics assets, worth $3.4 billion, booked a 9.6 per cent lift in values last year.

Charter Hall currently has a $2.3 billion industrial and logistics pipeline with a focus on Sydney and Melbourne.