Charter Hall's Direct Industrial Fund acquires investments pre-leased to Australia Post and Grace Worldwide

Following strong investor interest in Charter Hall's new Direct Industrial Fund (DIF), which has raised $40 million of equity since its launch in July 2010, the Fund has acquired a new distribution facility in Kingsgrove, New South Wales and agreed terms on a third asset in Willawong, Queensland.  The two transactions increase assets in DIF to approximately $70 million in four months.

The Kingsgrove distribution facility, located approximately 14 kilometres south-west of Sydney's CBD with convenient access to the M5 Motorway, Sydney Airport and Port Botany, is pre-leased to Australia Post for a 15 year lease term.  The 6,750 square metre facility is currently being built by Vaughan Constructions and is anticipated to be completed in mid 2011. Australia Post will utilise the new premises as a mail processing and distribution facility.

The Fund has also agreed terms to acquire a 21,880 square metre logistics facility in Brisbane's established industrial precinct of Willawong that has been pre-leased to Grace Worldwide for 12 years.  The Group's 50% owned national industrial developer, CIP, is developing the facility with practical completion estimated to be in mid 2011.

Charter Hall's Joint Managing Director, David Harrison, said: 'The Australia Post and Grace Worldwide transactions brings the number of assets in DIF to three with a total value of $69.5 million, in less than four months. This is a great vote of confidence in the Fund and testament to the Group's ability to acquire prime-grade industrial facilities off market.'

The Australia Post distribution centre and Grace Worldwide logistics facility were acquired on an average yield of 8.6%.  The acquisitions extend the Fund's weighted average lease term to 13.7 years, with average growth in property income of 3.4% per annum.

Richard Stacker, Chief Executive Officer of Charter Hall Direct Property, said: 'We anticipate continued strong interest from retail and self managed super funds in DIF and our other unlisted retail funds as more investors recognise the value on offer in the current market.

'There are a substantial number of boutique and large planning groups that have approved the use of DIF. The initial advisers who have recommended the fund recognise that DIF is an excellent investment opportunity for their clients because of its strong yield and that now is the time to invest in this product as the direct property market is beginning to turn upwards,' he added.

DIF targets an eight cent per unit distribution for the first two years. The Fund is targeting a total equity raise of $110 million (to acquire a $200 million geographically diversified portfolio of prime industrial assets) and is well advanced in achieving this objective. DIF received a ‘highly recommended' rating, being the highest possible rating awarded by the independent research house, Lonsec.

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