Charter Hall Group has launched a wholesale retail property fund aimed at satisfying growing demand from institutional investors for assets geared towards discretionary spending.
The fund’s founding capital partner is MTAA Super, one of Australia’s largest industry super funds, managing AUD9.2bn (€6.2bn) in retirement savings.
The firm has seeded its Charter Hall Retail Fund (CHRF) with the off-market purchase of Campbelltown Shopping Centre in Sydney, for AUD197m.
With ongoing discussions with new and existing investors, Charter Hall intends to grow assets under management in CHRF (to at least AUD1bn), as well as the number of capital partners to match the size of its wholesale office and industrial vehicles.
Speaking to IPE Real Estate, Greg Chubb, Charter Hall’s head of retail, said: “We are in discussions with domestic pension funds and offshore investors to participate as we grow the fund.
“We have good visibility of our next round of acquisitions and development opportunities.”
Charter Hall, a successful veteran in seeking out off-market deals – making acquisitions of AUD3bn in the last 12 months – is negotiating to acquire more shopping centres on the eastern seaboard of Australia.
“Investors are keen to invest in what we call the ‘convenience retail space’,” Chubb told IPE Real Estate. “These shopping malls cater to people’s daily needs – supermarkets, services, fresh food and convenience stores.
“They have been shown to be the most resilient of all commercial real estate.”
Chubb pointed out that non-discretionary spending was much less volatile than discretionary spending, and that this type of retail asset had shown it could deliver stable and predictable income over a long period.
He said Campbelltown Mall was located in a growth area, with an immediate catchment of some 70,000 residents and anchor tenants including leading supermarket chains Coles and Woolworths.
Charter Hall has committed to co-invest AUD46m towards the acquisition of the property, representing an initial 38% investment with initial gearing at 45%.
Charter Hall manages retail assets totalling more than AUD5bn, held mostly in its listed vehicle, Charter Hall Retail REIT.
Chubb’s aspiration is to grow CHRF to the size of its sister trusts – Charter Hall Direct Office Fund and the Charter Hall Direct Industrial suites of trusts – which now manage assets valued at AUD1.2bn and AUD1bn, respectively.
The group’s strategy is to rotate capital-raising within its stable of vehicles.
It is raising AUD50m from retail investors for its direct office fund.
In the past 12 months, it has raised AUD1.5bn.
Charter Hall is also set to launch Australia’s largest initial public offering of a property trust, the Charter Hall Long WALE REIT.
Analysts and market observers expect to be heavily oversubscribed when it is listed on the Australian Stock Exchange next month.
Targeting long-term corporate and government tenants, the REIT will have an initial portfolio of 66 properties, independently valued at AUD1.25bn.
Charter Hall, which manages around AUD17.5bn in Australian property, has acquired a 50% stake in a suburban office in Melbourne for AUD140.5m.
IPE Real Estate understands that the Melbourne asset will go into the proposed new Charter Hall Long WALE REIT.