Charter Hall Group (Charter Hall or the Group) today announced that its $3.5 billion Charter Hall Prime Office Fund (CPOF) has completed a first close equity raise of $340 million within eight weeks of its launch. The raising generated strong interest from both local and offshore existing and new investors seeking exposure to the strongly performing office portfolio.
The equity raising, has further enhanced CPOF’s balance sheet, replenishing dry powder to fund CPOF’s active development pipeline of circa $1.5 billion predominantly located within the eastern seaboard CBD office markets. This pipeline will further enhance the Fund’s portfolio metrics by reducing its average building age, extending the WALE and continue to attract investment grade tenant customers, driving the sector leading performance of CPOF within the core IPD index.
Charter Hall Group’s Office CEO, Adrian Taylor, explained “Global investment conditions remain 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 with a proven track record and origination capability who can provide access to high quality core real estate.
“This raising has been well supported by both domestic and offshore investors with more than 25 wholesale investors partnering with the Group in CPOF. During the latest CPOF raising, we are pleased to have formed a new investor relationship with one of Japan’s most substantial and well-regarded investment groups. This is in addition to expanding the relationships with our existing Australian, South Korean and European investor base.” Mr Taylor added.
CPOF, provided investors with a 19.2% return in fiscal year 2017, and has been the top performing multi-asset fund in the MSCI / IPD Australia Wholesale Property Funds Index across the office sector over 1, 2 and 3 years to 30 September 2017 and was the best performing multi-asset fund in the index over the last 12 months across all sectors.
Charter Hall announced in September the appointment of Matthew Brown as CPOF Fund Manager. Mr Brown joined the Group following ten years with GIC Real Estate where his responsibilities included execution of GIC’s real estate investment strategy and management of its existing direct real estate portfolio.
Commenting on the successful first close equity raise, CPOF Fund Manager, Matthew Brown said: “Following a very strong response from both our existing and new wholesale investors, CPOF is well placed to grow its portfolio and continue its outperformance. The combined impact from both equity raisings and prudent capital management initiatives will see the Fund continue to focus its attention on office markets in the well performing eastern seaboard states, where it has a strong pipeline of develop to hold opportunities.
“I look forward to further driving the sector leading performance of CPOF and applying my global experience across investment strategy, transactions and portfolio construction to the benefit of both CPOF investors and Charter Hall,” Mr Brown added.
CPOF’s Prime-Grade portfolio of 21 office properties is well positioned with over 80% located in the strong performing eastern seaboard states with an occupancy level of 98% and an average WALE of 6.4 years. The Fund’s portfolio has a weighted average asset age of just 9 years and strong exposure to high quality tenant covenants with 99% of income from investment grade, government or nationally recognised tenants.
Interest in the balance of CPOF’s target equity raising of $500 million is strong with expectations the balance of the capital raising will be completed during the 2018 financial year.