Charter Hall eyes expansion as listed trusts back in deal action

Charter Hall has emerged as one of the busiest players amid a pick-up in dealmaking in the listed property trust sector.

Charter Hall chief executive David Harrison

The return to work in office towers around Australia is being matched by a pick-up in deal-making by some of the biggest names in the sector as they position for a recovery.

Listed property trusts are saying the action is on again and Charter Hall has emerged as one of the busiest players. It has just closed a deal to buy a portfolio of four Aldi distribution centres for about $648m, with the backing of pension house Allianz, in a deal managed by JLL’s Tony Iuliano.

The company is also laying the groundwork for the next office cycle, picking up a development site in the heart of Brisbane the Kador Group had put on the block for about $70m last year.

The play for the site where a 274m tall tower can be built is also a sign the Queensland capital could be one of the first markets out of the block when demand for office space recovers.

Charter Hall said last month it had marshalled billions of dollars from its local and offshore pension backers to deploy as it looks to expand in offices and logistics.

The purchase of the Aldi distribution centres via a sale and leaseback deal is the largest direct transaction to be struck in commercial property in the wake of the coronavirus crisis.

The transaction also shows the sharp split between logistics property and prime office towers against the shopping centre sector. The portfolio was bought by the Charter Hall-managed CPIF and Allianz Real Estate.

The assets span Sydney, Melbourne and Brisbane and were sold with seven-year lease back initial terms plus multiple seven-year options.

The Sydney logistics facilities are in the Minchinbury and Prestons and the Melbourne facility is in Dandenong industrial precinct, with the Brisbane asset in Brendale.

The $6bn wholesale fund CPIF will split the deal with Allianz Real Estate as a 50-50 joint venture partner.

Charter Hall chief executive David Harrison, said the company had extended its cross-sector relationship with Aldi, who would become a sizeable cross sector tenant for Charter Hall. The overall price made up of $648m for all centres and Charter Hall paying $15m for some surplus land in Dandenong where it could put a new 30,000sq m facility.

The Aldi portfolio drew almost a dozen bids and was barely changed by the coronavirus as it traded on a yield of about 4.75 per cent. “I think industrial and logistics will be the least affected by the coronavirus,” Mr Harrison said, noting that retail sales shifting online had a multiplier effect for industrial space.

“Accessing the ongoing growth and resilience of grocery retailing in Australia has been a consistent thematic driving the growth of our industrial and logistics portfolio toward $10bn and beyond,” Mr Harrison said.

Mr Harrison said that despite concerns about the FIRB taking longer the transaction had been approved within three weeks. The company’s bullish outlook also extends to the office market where it acquiring a Brisbane site.

The Kador site is the former riverfront home of Southern Cross Austereo’s Brisbane operations and the 6436sq m holding will benefit from the area’s rejuvenation. Justin Bond of Knight Frank and Jason Lynch and Don Mackenzie of Colliers International ran an expressions-of-interest campaign but did not return calls.