Blackstone Acquires Big Slice Of Charter Hall Industrial Portfolio

Image: 2-10 Interchange Drive, Laverton North, VIC

Charter Hall Group announced that they had entered into a deal to sell $126 million worth of non-core industrial properties to investment firm Blackstone.

The deal with Blackstone was brokered by the Prime Industrial Fund (CPIF) and the Core Logistics Partnership (CLP), who owned parts of the industrial portfolio which consisted of four small properties.

The price of the sale reflected a premium above book value and an equated capitalisation rate of 6.98%.

Charter Hall said the transaction will give them the money necessary to seek out other industrial opportunities, which have the capacity to provide the Group’s industrial sector a further $1.3 billion FUM or 850,000 square metres of GLA.

The industrial and logistics sector has been a key growth sector for Charter Hall over the past five years, and is now Australia’s second largest industrial platform, with a $4.7 billion portfolio located in key Australian markets. The Groups industrial funds under management in 31 December 2016 made up 25% of the Group’s $19 billion funds under management (FUM).

“Across the Group we are realising the benefits of scale having the country’s second largest industrial and logistics platform with a true “cross sector” capability,” Charter Hall Group Executive of Industrial, Paul Ford said.

“The strong demand from existing customers looking to grow within the portfolio and new customers looking to partner with us across the portfolio is allowing us to redirect capital to superior risk-adjusted returns by delivering on our de-risked development pipeline with high quality tenant pre-commitments.

“This transaction demonstrates the Group’s focus on being an active seller in order to further improve portfolio quality and enhance returns for our capital partners,” he said.

The portfolio comprises assets covering more than 150,000 square metres of GLA, with a 95% weighted occupancy and a portfolio WALE of 5.2 years”

  • Property 1: 175 Eagle Farm Road, Pinkenba, QLD
  • Property 2: 140-160 Robinson Road, Geebung, QLD
  • Property 3: 2-10 Interchange Drive, Laverton North, VIC
  • Property 4: 5-29 Frederick Road, Tottenham, VIC

The CPIF portfolio consisted of 41 assets located within close proximity of key transport infrastructure, had high quality earnings underpinned by long term leases to strong tenant covenants, and high quality properties with an average building age of 9.7 years across the portfolio.

CPIF Fund Manager Richard Mason said the divestment allowed CPIF to reinvest the net sale proceeds into an increasing Sydney development pipeline, which comprises the Chullora Logistics Park, the M5 / M7 Logistics Park at Prestons and the Huntingwood Logistics Park together with the Motorway Industrial Park at Berrinba.

The $1.4 billion CLP portfolio comprised 24 high quality assets with a WALE of 9.6 years and 100% occupancy. In 1H FY17 the Fund delivered three new pre-leased facilities at Drystone Estate in Melbourne’s industrial suburb of Laverton North, including The Reject Shop (38,000 square metres GLA), Target (63,000 square metres GLA) and Rand (18,000 square metres GLA), with a combined on completion value of $145 million.

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