The Sydney-based Charter Hall Group is to launch a AUD400m (€278m) unlisted industrial fund.
It will be the fourth in the listed diversified-property group’s Direct Industrial Fund series.
Nick Kelly, Charter Hall’s head of direct property, said the fund would cater to Australia’s largest pool of funds under management, known as the self-managed superannuation fund (SMSF) industry.
The sector has accumulated more than AUD660bn in capital – larger than the industry super funds.
Kelly told IPE Real Estate there was also growing offshore interest from small not-for-profit institutions, family offices and high net worth individuals, looking to real estate in Australia for higher returns and diversification.
He said Charter Hall’s direct industrial and office funds had generated average annual returns of 6.5-6.7%.
The Direct Industrial Fund 4, he said, will be seeded with two assets worth a total of AUD84m.
DIF4 will acquire an industrial facility in South Australia leased to a leading agribusiness on a 23-year lease for AUD34m.
A second asset is an AUD50m stake in Charter Hall’s AUD1.6bn Core Logistics Partnership, which invests in 26 institutional-grade distribution centres.
Kelly said having a stake in this partnership offered the new fund immediate diversification of both assets and geographical locations.
As the fund grows, he added, it will increase its stake in the partnership.
“By this time next year, when the fund is open to overseas investors, we expect to raise $100m,” he said.
The fund’s portfolio is expected to grow to more than AUD400m on gearing of 30-45%.
Kelly said that, although the bulk of Charter Hall’s funds under management (AUD18bn) comes from pension and sovereign wealth funds, up to 20% of assets under management comes from the smaller end of town and retail investors.
Year to date, Charter Hall has raised AUD838m in gross equity and increased funds under management by 3%.
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