Charter Hall strikes property partnership deal for Jeld-Wen’s real estate portfolio

Charter Hall Group chief executive David Harrison.

Property funds manager Charter Hall is positioned to emerge as the property partner on private equity firm Platinum’s acquisition of building products group Jeld-Wen’s Australian and New Zealand business.

Platinum last week unveiled the $688m purchase after a sale process run by Macquarie Capital but the off-market real estate transaction could stay under wraps until finalised.

Teaming with Charter Hall – which could outlay more than $200m via its funds business – could lower Platinum’s equity commitment to the takeover and give it a powerful property partner.

For the David Harrison-led Charter Hall, the play would again see it as the real estate backer in a takeover play – a role in which it made a name even as corporate activity quietened last year.

But it has strong form and could pick up momentum as corporate plays and large asset sales return.

It has been active. In 2020, Visy struck a deal to acquire the Australasian glass manufacturing business of Owens Illinois (O-I) in a deal worth almost $1bn. As part of that deal, two Charter Hall funds acquired a $215m portfolio of industrial property from Owens-Illinois Australia. Visy became the ultimate tenant customer when the deal was completed.

Charter Hall is top operator in large-scale sale and leaseback portfolios and can still rapidly close deals.

When private equity company Kohlberg Kravis Roberts was last year making a play for Australia’s biggest private hospital group, Ramsay Health Care, it weighed up plans for a potential split off of the real estate.

At the time, Charter Hall was among the parties positioning to acquire billions of dollars worth of medical properties.

But it is the company’s longer-term name in sale and leasebacks that give it the edge.

It has undertaken more than $8bn in such deals across its platform, including with groups such as Telstra, BP, Aldi, Arnott’s, Woolworths, Bombardier Transport, Bunnings, Coca-Cola Amatil and Ingham’s.

The leases on Jeld-Wen’s near 10-strong portfolio have not been disclosed but are likely to fit with Charter Hall’s focus on very long tenure, high quality properties carrying inflation-linked and fixed increases.

Jeld-Wen’s local unit was considered the best part of the company, with top position in Australasia as a designer, manufacturer and distributor of windows and doors with brands including Corinthian, Stegbar and Breezway.

The LA-based Platinum, known as an opportunistic investor, was founded in 1995 by Tom Gores and has about $47bn of assets under management and a portfolio of about 50 operating companies. It beat Australian private equity group Allegro Funds to the prize of buying the business but the parties have yet to comment on the property play.

In 2022, Jeld-Wen’s Australasia net income fell $US6.8m ($10.2m) to $US25.4m and adjusted earnings before interest, tax, depreciation and amortisation fell $US5.9m to $US65.6m due to the building downturn.

But its long-term prospects are good.