Charter Hall builds $5bn war chest for logistics and towers spree

Property funds group Charter Hall says it’s marshalled billions from pension backers, as it looks to expand in logistics and offices.

Charter Hall CEO David Harrison. Picture: Chris Pavlich

Property funds group Charter Hall says it has marshalled billions of dollars from its local and offshore pension backers that it can deploy as it looks to expand in logistics and offices.

The company's model was rocked by the coronavirus crisis, threatening its ability to maintain the rapid growth of its $40bn empire, which also spans retail, petrol stations and even agriculture.

But it has since struck major logistics deals, raised equity for two listed trusts, and is chasing the Aldi distribution centre portfolio, which it is favoured to pick up for close to $700m.

The company said it had reviewed the impacts from COVID-19 and reaffirmed its fiscal 2020 earnings guidance for about 40 per cent post-tax operating earnings per security growth on fiscal 2019.

Despite some superannuation funds facing liquidity pressures, Charter Hall said its capital partners remain committed to their existing investments and were looking for new opportunities to deploy additional capital.

"Across the funds platform the group has $5 billion in existing investment capacity with approximately 40 per cent of this in cash,” it said.

“It is expected that our wholesale capital partners will be active in deploying additional new equity in the next 12 months.”

Deal makers in commercial property have told The Australian that activity levels have plunged, with few vendors wanting to go to market during a crisis and most offshore players unable to invest in institutional property because they cannot inspect assets and as many face problems in their home markets.

But Charter Hall has been focused on off-market deal-making and sees a strong pipeline of Australian companies wanting to unload properties from their balance sheets and looking to overhaul their supply chains.

After a series of recent deals the company's logistics holdings are around $10bn, giving it an edge in the sought-after sector.

Charter Hall said it was also working with tenants who had been affected adversely by COVID-19 and would support them in the challenging period. It has poured new capital into pre-leased developments and making selective acquisitions.

“Our develop-to-core strategy continues to provide opportunities to deliver returns for investors as evidenced by the increases in both our committed developments and uncommitted projects, now combined to create a further $7.3 billion pipeline," chief executive David Harrison said.

Across the company's funds, just 9.7 per cent of tenants fall under the Morrison government's leasing code and Charter Hall said it would work with tenants to "ensure sustainable and long term outcomes".

The group said it had $3bn in committed projects that will deliver high-quality, long-leased assets for its funds and drive incremental fund returns. The $4.3bn uncommitted pipeline also stands ready to follow on.

Charter Hall said it had a focus on defensive, essential services and resilient industries, combined with sector-leading long leases.

The property funds manager has $420m of available liquidity with its position to lift further as a result of its distribution policy, which it said would leave it well-placed to take advantage of future opportunities.

Charter Hall shares closed up 4.3 per cent at $7.61.