ASX-listed fund manager Charter Hall has sold off an $80 million university building in Sydney’s Kensington from one of its unlisted funds as it works to meet redemption requests from investors in the $2.5 billion vehicle.
The 10,685 square metre building on Anzac Parade was held in the Charter Hall Direct PFA Fund, which has 20 small office blocks in its portfolio. This month the fund informed its investors it would need to satisfy their redemption requests through staggered payments over time as it weathered a choppy commercial property market.
The Charter Hall Direct PFA Fund has sold 221-227 Anzac Parade, in Sydney’s Kensington.
The $80 million sales sticker for 221-227 Anzac Parade is in line with the seven-storey building’s latest valuation and is around the same price the Charter Hall fund paid when it acquired the university block two years ago.
So far, investors seeking withdrawals in the Direct PFA Fund have been paid out 25 per cent of their full request. Charter Hall has told them it will need to sell assets to satisfy the remaining 75 per cent.
“However, we will only sell assets for prices that reflect fair value and given the lower sales volumes in the office investment markets, sales have proved challenging,” the fund manager told its investors this month.
Steven Bennett, who heads Charter Hall’s direct funds arm, reiterated that strategy on Thursday in a statement that noted all requests will be met “in full in an orderly and progressive manner”.
“Acting in the best interest of all investors, we will continue to apply financial discipline to deliver stability and long-term returns as well as liquidity,” he said.
The move to satisfy redemptions in tranches comes amid a broader disruption to the commercial property market, where values – especially for office towers – have come under pressure from rising rates.
The stocks of listed real estate investment trusts, known as REITs, have been heavily sold off over the past 18 months as interest rates and bond yields rose. That disruption is still making its way through the direct market and assets held in unlisted vehicles.
Last week, a single-asset Adelaide office property fund run by Centuria said it had switched off distributions to its investors this financial year, as it dealt with unexpected vacancy and sought to resolve its finances.
As well, MA Financial has told investors in its $1.5 billion unlisted Redcape hotels fund that withdrawals are paused until at least the end of December.
However, shares in Charter Hall and its peers jumped on Thursday as investors bet that the end of volatility across the sector may finally be in sight.
Investors took heart from a more dovish turn by the US Federal Reserve this week, with remarks by chairman Jerome Powell triggering optimism that the Fed may have finished its tightening cycle, causing the local real estate sector to rally 3.3 per cent on Thursday
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