Charter Hall swoops on PFD logistics portfolio ahead of Woolworths deal

Charter Hall has bought a warehouse network from PFD, in which Woolworths is taking a stake. Picture:
Charter Hall has bought a warehouse network from PFD, in which Woolworths is taking a stake. Picture:

Property funds group Charter Hall has swooped on a major logistics portfolio, picking up a 25-strong warehouse network from the Smith family’s PFD Food Services, in which Woolworths is taking a controlling stake.

The company’s $6 billion wholesale industrial and logistics fund snapped up the cold store and food distribution centre portfolio in a sale and leaseback deal with PFD.

The wholesale food distributor purchases a wide range of food products from manufacturers and distributes them to food service businesses such as restaurants and cafes, fast food franchises, hotels and clubs.

Woolworths last year entered the $18 billion food services industry via its investing in PFD and has argued the deal won’t lessen competition despite concerns raised by the Australian Competition and Consumer Commission.

Woolworths will make a $552 million investment in PFD for a controlling 65% stake, and has pledged itself to confidential trading terms and other moves to protect suppliers and customers.

The competition regulator last year expressed its concerns that the purchase of the stake in PFD could hand Woolworths too much power when dealing with food manufacturers.

The supermarket giant last month said it has been given a year longer by the competition regulator for approval of the PFD purchase.

If the deal gets the green light it will improve Charter Hall’s position as the PFD covenant will become backed by Woolworths. The company’s CPIF will hold the 25 cold store and food distribution centres that were bought for $269.4 million.

The centres fit with Charter Hall’s focus on long-leased property and the portfolio carries an average 13.8 year sale and leaseback to PFD.

The portfolio is located across Australia, with most income derived from Victoria, followed by Queensland and SA. It has a site area of about 292,665sqm and about 82,331sqm of space, giving a low overall site coverage that allows for future expansion.

“This acquisition continues our momentum in securing sale and leaseback portfolios from leading corporates and demonstrates the group’s ability to close large transactions, swiftly and efficiently within the desired time frames of vendors,” Charter Hall chief executive David Harrison said.

PFD founder Rick Smith said that Charter Hall was an experienced owner of warehouse and logistics property. “It provides a key new relationship to facilitate the further growth that we are enthusiastically planning for the business,” he said.

Charter Hall continues to be extremely active in the industrial market acquiring more than $2.5 billion in industrial and logistics facilities this financial year and $6.3 billion in the last three years. It also has a $2.3 billion industrial development pipeline.

The PFD acquisition also adds to Charter Hall’s portfolio in the food logistics sector, with big companies including Coles, Woolworths, Metcash, ALDI, Coca-Cola Amatil, Lion Dairy and Arnotts dominating.

Charter Hall last Friday upgraded its operating earnings per security guidance by 3.6% to no less than 57 cents for this financial year.

Macquarie analysts said this was ahead of consensus and the direct business had reaped strong inflows, resulting in deployment ahead of expectations.

Charter Hall buys include its PFA fund buying an Anzac Parade building and two Patties Foods facilities being picked up by an industrial fund.

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