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Charter Hall Prime Industrial Fund enhances debt platform, completing USPP issuance oversubscribed


Charter Hall Group today announced that its largest industrial fund, the Charter Hall Prime Industrial Fund (“CPIF” or the “Fund”) has enhanced and diversified the tenor of its debt-funding platform, pricing a A$350 million (equivalent) US Private Placement transaction.

CPIF, rated Baa1 by Moody’s, will issue:

  • US$115 million (A$149.2 million) 10 year notes at fixed coupon of 3.94%
  • US$115 million (A$149.2 million) 12 year notes at fixed coupon of 4.04%
  • A$50 million of combined 10 and 12 year notes at an average fixed coupon of 5.04%

The US$ denominated notes have been fully currency hedged and swapped back to an average floating margin of 2.12% over the 90 day bank bill swap rate (BBSW). Strong investor demand enabled pricing to tighten 10 bps from the tight end of initial guidance.

CPIF’s inaugural transaction in the US Private Placement market attracted significant interest from investors, achieving an order book of US$1.2 billion that was eight times oversubscribed from the initial target.

The USPP transaction is due to settle in May 2017 and is subject to standard investor due diligence and documentation. Proceeds will be used towards paying down existing debt facilities and will enhance the debt-funding platform of CPIF with the continuing objective to establish a best practice capital structure across the Group’s managed funds.

Commenting on the USPP Phil Schretzmeyer, joint acting Chief Financial Officer, said: “We are pleased to have further enhanced the flexibility and scalability of our debt funding platform with an eight times oversubscribed USPP issuance for CPIF. This is the third time our funds have successfully accessed the USPP market with our listed retail REIT completing two oversubscribed issuances. The strong response reflects the confidence in the quality of CPIF’s “core” asset industrial and logistics portfolio.”

The $2 billion CPIF property portfolio is geographically diverse with a high proportion of “core” assets enhanced via land banks that generate pre-leased new investment assets. The portfolio consists of 44 assets located within close proximity of key transport infrastructure, has high quality earnings underpinned by long term leases to strong tenant covenants, and high quality properties with an average building age of 9.7 years across the portfolio.

“Charter Hall is focused on developing capital partnerships that enhance flexibility, duration and scalability of its debt platform, while also continuing to deliver earnings per unit growth for our capital partners,” Mr Schretzmeyer added.

Richard Mason, CPIF Fund Manager, commented: “The combined impact of recent CPIF capital initiatives including setting a target gearing of below 30% and successful capital raisings was reflected in Moody’s assigning the Fund a Baa1 senior unsecured issuer rating and inclusion of the Fund in the Core MSCI / IPD Australia Wholesale Property Funds Index.

“Completing the USPP market issuance eight times oversubscribed reflects strong confidence in the quality of our portfolio and our position as Australia’s second largest owner and manager of industrial and logistics assets, with a $4.7 billion portfolio located in key Australian markets. Our prudent capital management initiatives will enhance CPIF’s weighted average debt maturity, diversify its debt sources and more closely match CPIF’s asset WALE with debt maturity.”

<View PDF version of ASX release >

For further information, please

Paul Ford
Group Executive - Industrial
Charter Hall 

T +61 2 8651 9142

For investor enquiries, please

Phil Schretzmeyer 
Joint Acting Chief Financial Officer
Charter Hall

T: +61 2 8651 9246

For media enquiries, please

Angus Booth
Group Manager – External Affairs
Charter Hall 

T: +61 8651 9223     

Richard Mason
Fund Manager
Charter Hall 

T +61 2 8651 9259