Charter Hall and Folkestone acquisitions for unlisted funds

This week, both Charter Hall and Folkestone announced acquisitions for their unlisted property funds.

Charter Hall will acquire 44 Sydney Avenue, Forrest ACT, a 9,950 sqm office building, for $58.6M from fund manager Quintessential Equity. The property is anchored by the Department of Foreign Affairs and Trade, with a WALE of 7.9 years and a 4.5 Star NABERS Energy rating. Charter Hall intends to place the property in its recently relaunched Direct PFA Fund, which has raised $80M over the past three months. The Direct PFA Fund is currently open to investors and is targeted yield of 7.25% p.a.

Folkestone announced it will launch a new Green Square Hotel Fund to acquire a hotel under development at 18 O’Riordan St, Alexandria NSW. The acquisition was made from GS Hotel Development Pty Ltd (developer), a joint venture between Folkestone Limited and Veriu Hotel and Suites. The fund is seeking to raise $23.2M of capital, targeting a 7% yield and an IRR of 12.6%. The 144-room hotel is expected to open in July 2019. Core Property expects the Fund will receive significant demand from investors following Folkestone’s recent $50M capital raising for its Sydney Airport Hotel Fund, which was oversubscribed.

Asia Pacific Data Centre Group (ASX: AJD) fell 11.5% during the week, after 360 Capital Group’s (ASX: TGP) all-cash takeover offer of $1.95 lapsed earlier in the week. As it stands TGP owns 67.3%, while NextDC (ASX: NXT) the tenant and underbidder, owns 29.2%. The remaining 3.5% is held by around 380 minority securityholders. Core Property expects AJD’s price may continue to be weak whilst uncertainty remains over its ownership structure between TGP and NXT.