Charter Hall Prime Office Fund (CPOF) has raised AUD340m (€219m) in the first close of the AUD500m equity offering within eight weeks of its launch.
Richard Stacker, Charter Hall’s global head of investor relations, told IPE Real Assets the capital was raised from five investors, including two pension funds investing with CPOF for the first time.
One of the new investors is a Japanese pension fund which already has an investment with another Australian manager. The second is an Australian super fund.
However, the lion’s share of the AUD340m came from three existing investors, topping up their investment in the AUD3.5b office fund.
Stacker expects the remaining AUD160m to be taken up by new investors who are currently undertaking due diligence on both the fund and Charter Hall.
Final close is expected in the first quarter of 2018.
The raising generated strong interest both locally and offshore from existing and new investors seeking exposure to Australia’s strongly- performing office portfolio.
Institutions from Korea and Europe, along with Australian super funds, are among those to express interest in the capital raising.
Stackers said investors are attracted to CPOF (which has around 30 institutional investors) because of its consistent out-performance and the quality of its development pipeline
CPOF provided investors with a 19.2% return in fiscal 2017, and has been the top-performing multi-asset fund in the MSCI/IPD Australia Wholesale Property Funds Index across the office sector over the 1, 2 and 3 years to September 30.
The equity raising will be used partly to fund CPOF’s active development pipeline of around AUD1.5bn, predominantly located in key central business districts office markets.
This pipeline will further enhance the fund’s portfolio by reducing its average building age, extending the WALE (weighted-average lease) and continue to attract investment-grade tenant customers, said Matthew Brown, who joined Charter Hall this month as CPOF fund manager after a decade with GIC Real Estate.
Brown said the fund would continue to focus on office markets in Australia’s well-performing eastern seaboard states, where CPOF has a strong pipeline of “develop to hold” opportunities.
CPOF owns 21 office properties with an occupancy level of 98% and an average WALE of 6.4 years - 80% of the buildings are in Sydney, Melbourne and Brisbane.
In March this year, IPE Real Assets reported that Australian fund manager Charter Hall plans to raise AUD800m its office fund CPOF and Charter Hall Prime Industrial Fund (CPIF).