Investor knockback won’t deter Charter Hall trust listing

David Harrison, managing director of Charter Hall. Picture: Glenn Hunt.
David Harrison, managing director of Charter Hall. Picture: Glenn Hunt.

Charter Hall Group will forge ahead with plans to list a specialist real estate investment trust backed by about $1.3 billion worth of property in October despite investors in two of its unlisted funds voting not to roll over into the new vehicle.

The group in June unveiled plans to float the real estate investment trust, the Charter Hall Long WALE REIT, which will be seeded with assets held in the group’s $17 billion unlisted funds empire.

Charter Hall, led by chief executive David Harrison, is capitalising on the strong pricing of existing long WALE trusts, and has also bought a $100 million warehouse to go into the fund.

While investors in the $260 million Charter Hall Direct Industrial Fund No 1 voted to roll over into the new trust, those in the Charter Hall Direct BW Trust and Charter Hall Direct CDC Trust decided to keep their investments in their unlisted format.

The two funds’ holdings amount to about $150 million worth of the $1.45 billion of the assets that Charter Hall had planned to direct towards the float, with the bulk coming from its wholesale property empire.

DIF No 1 investors wanted to exit as they had expected to end their holdings this financial year and they may take cash or shares.

The investors who voted the plan down are high-net-worth individuals who can hold on to their interests for at least three more years as they can reap high yields and expect that property values may rise further.

The DIF No 1 owns seven properties around Australia worth about $260 million. The BW Trust owns four near-new Bunnings retail properties across NSW and Victoria, valued at about $100 million.

The CDC Trust has a 52 % stake in the Coles distribution centre in Adelaide, built for the supermarket giant in 2007. The Direct Industrial Funds 2 & 3 also have interests in the centre.

The prospectus for the new fund is still to be issued around September 21 and the fund is slated to list on October 7.

The fund may have a slightly lighter retail register, but investment banks UBS and JPMorgan, working as joint lead managers, are already fielding strong institutional interest.

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