Charter Hall office fund plans A$500m fundraise to finance new deals
The unlisted Charter Hall Prime Office Fund (CPOF) is raising another A$500m (€311.8m), with the majority of the equity expected to come from Asian pension funds and domestic super funds.
The flagship vehicle of Australia’s Charter Hall Group is replenishing its capital base to finance new investments, including development projects, and comes after the A$4.5bn entity’s A$500m fundraising a year ago.
Last week, CPOF bought a half-stake in the A$830m Telstra Tower in Melbourne’s CBD. Charter Hall and Canada’s Public Sector Pension Investment Plan will own the remaining 50% of the tower.
Matthew Brown, CPOF fund manager and head of office asset management at Charter Hall, told IPE Real Assets that existing investors with pre-emptive rights had already committed A$300m to the current raising, adding that the fund is in the process of talking to a number of potential new investors to take up the remaining A$200m.
“We have seen increased interest through our two raisings predominantly from bigger, well-known Asian pension funds, with a particular focus from Japan and Korea.”
Brown said that Asian investors first allocate to the larger markets of the US and Europe. They have fulfilled their allocations in those two regions and are now looking to Asia.
He said these Asian investors want to invest in core assets in a market of scale, and, in Asia, Australia is the only market that can meet their criteria. They have become more actively focussed on Australia.
“For most Asian institutions and pension funds, the most efficient way to own real estate is through a fund. Our fund has become a beneficiary of the trend,” he said.
CPOF has 30 investors, notably Australia industry and retail super funds and Asian investors. Europe and Middle East institutions make up a “small portion” of the investor base.
Brown said the raisings would be drawn down primarily to fund two current development projects – 130 Lonsdale Street in Melbourne’s central business district and GPO Exchange in Adelaide.
The projects have substantial pre-leasing and will have a combined completed value of A$450m.
He said CPOF had capacity on its balance sheet to pay for its share of the Telstra Tower acquisition.