Charter Hall, Ascot Capital kick off $1.3bn spree
A wave of industrial property deals worth more than $1.3 billion is set to be completed over the next month with Charter Hall Group and Ascot Capital emerging as the contenders to buy a $300 million portfolio of assets being offloaded by Malaysia’s Sime Darby.
The pair, who are thought to be positioning to carve up the portfolio, would seek to structure long-term leaseback deals with the Asian conglomerate, which boasts one of the region’s best covenants.
The sale, being handled by CBRE, will likely see the David Harrison-led Charter Hall add to its $4.3 billion of industrial assets and Ascot Capital offer an unlisted trust to its wealthy investors, but the deal is yet to be finalised.
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The properties are coming out of the Sime Darby Industrial business, which sells and rents Caterpillar equipment across Australia. The portfolio spans 13 properties concentrated in Queensland and the Northern Territory.
A portfolio deal would cap the run of benchmark-setting sales in industrial property, with the sector gaining renewed momentum after last year’s $1.07 billion purchase of the GIC Real Estate/Frasers Property Australia portfolio by Singapore-listed Ascendas REIT.
The scale and remarkable pricing on that deal gave pause to some buyers while private equity-backed Asian logistics player e-Shang Redwood’s pullback from plans to buy three portfolios of local industrial property shook the market earlier this year.
Those deals are now back on track, in a sign the sector has the depth to sustain its momentum despite some concerns emerging about the pricing of lower-grade properties in some areas.
While the parties and agents declined to comment on the latest deal, the new field of buyers is very well established.
AMP Capital is in due diligence to acquire hundreds of millions of dollars of industrial property out of two major portfolios. In the first play, AMP is in due diligence on a series of facilities being bought from private equity real estate group Altis Property Partners. That group offered a larger $285 million portfolio of industrial and logistics assets and Singapore-listed Mapletree Logistics Trust bought four of the warehouses in Sydney for $85 million, with AMP looking at the remaining properties through Colliers International.
The sector has the depth to sustain its momentum despite some concerns emerging about the pricing of lower-grade properties in some areas
AMP Capital is also targeting a portfolio being sold by JPMorgan Asset Management for about $250 million via Colliers International and CBRE. Private equity giant the Blackstone Group, a major player in industrial and logistics property, is also in talks to buy property worth more than $600 million from the Goodman Group via CBRE and JLL.
Listed investors are also backing the asset class. The Frasers Logistics and Industrial Trust, which has a $1.58 billion portfolio of Australian properties, priced its $900 million equity-raising at the top of its range on Friday and will shortly list as Singapore’s largest float in three years. The trust will be a formidable player for years to come as it trails only sector giant Goodman Group on the local scene. A report by JLL on the Australian market, accompanying the Frasers prospectus, says further tightening of prime grade yields is forecast this year.
The report warns that the yield trough for this cycle is expected occur in 2016, given the outlook for moderately rising global interest rates and bond yields. However, in a significant shift, even when yields come back out over the next five years, they will peak at much lower levels than after the global financial crisis, JLL says.
This article originally appeared on www.theaustralian.com.au/property.