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Charter Hall office fund limits redemptions to 25pc in falling market

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Falling values have hit investors in the country’s largest office landlord, with Charter Hall limiting redemptions in a $2.5 billion unlisted office fund to just 25 per cent, saying it was unable to sell buildings at prices it deemed fair.

In contrast to listed real estate investment trusts, or REITs, which have suffered hefty share price falls, the valuations of unlisted assets, at a time when many landlords have resisted selling andCharter Hall chief executive David Harrison told last year’s AFR Property Summit that falling share values often bore little relation to underlying asset values andBut the falling tide in office is leaving funds dependent on the sector exposed, as the Lonsec report last year warned was a risk.

“Due to the fund’s significant exposure to illiquid assets and because redemption opportunities during each five-year term are at the discretion of the responsible entity, liquidity risk in the fund is deemed to be high compared with other asset classes.”

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