Ex-Masters sites: Major player loads up on Bunnings stores
The acquisitive Charter Hall’s property funds empire has topped $20 billion with further growth in the offing as the company holds a $3 billion war chest back for its expansion.
The listed group this week revealed it had picked up a portfolio of Bunnings assets from the Home Consortium and a trio of industrial parks from Malaysian company Sime Darby.
Earlier this week the David Harrison-led company said it was involved in up to a quarter of all major commercial real estate transactions in Australia, which is fuelling its growth.
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Charter Hall told investors that equity flows from Europe and North America had increased and it was picking up fresh interest from Japan and Korea.
In the larger property deal, Charter Hall’s unlisted wholesale fund bought a portfolio of former Masters retail outlets in an off-market play worth $187 million.
The sites have fresh 12-year leases to retailer Bunnings and took Charter Hall’s Long WALE Hardware Partnership (LWHP) portfolio of mainly Bunnings-leased assets to about $920 million.
Charter Hall says the deal was done at a 10% discount to the independent valuation. After the deal, it will have 41 Bunnings-leased assets across the country, worth $1.4 billion.
Harrison says the group has a strong track record of executing off-market transactions.
“The acquisition of this portfolio aligns with the existing LWHP strategy by increasing weighting by both income and value towards well located metropolitan locations and increasing exposure to high quality retail assets with strong tenant covenant customers,” he says.
The purchase of the sites — three in WA, one in Queensland and two in NSW — was funded with a $90 million investment from LWHP partners.
The play came after Charter Hall’s largest industrial fund — the Prime Industrial Fund — bought a portfolio of Queensland sites in a $100 million-plus purchase from Hastings Deering.
The purchase came a year after Hastings Deering’s Malaysian parent company, conglomerate Sime Darby, offered a $300 million national portfolio of 13 properties for sale. Sime Darby later weighed listing the portfolio on the Singapore Exchange but this did not eventuate.
The Charter Hall fund, which was cashed up after a $300 million equity raising, has now added three of the main properties to its $2.4 billion industrial portfolio. The sites are in southern Brisbane industrial zones Acacia Ridge and Archerfield, and are fully leased to Hastings Deering on 30-year triple net leases with two, 10-year renewal options.
Brokerage UBS tipped upgrades if Charter Hall’s first quarter performance was replicated.
– with Ben Wilmot
This article originally appeared on www.theaustralian.com.au/property.