Charter Hall Umbrella Fund Liquidity Limited Facility
The Charter Hall Group today updated Unit Holders in the unlisted Charter Hall Umbrella Fund ('CHUF' or 'the Fund'), that the Limited Liquidity Facility (LLF) has been temporarily suspended effective from Friday 24 October 2008.
CHUF is an unlisted retail property fund managed by the Charter Hall Group. Charter Hall Holdings Pty Limited (CHH) provides a LLF for the Fund. Under the terms of the LLF, CHUF Unit Holders can sell units to CHH or its nominee, which has been the Charter Hall Property Trust, for the current CHUF Unit Price less a facilitation fee.
The Australian funds management industry has recently seen numerous retail property, mortgage and income funds close to applications and redemptions in response to an increased number of investors requesting the redemption of their funds. The requests for immediate liquidity have been amplified in recent weeks by the Federal Government's guarantee of cash deposits.
In the context of the current market environment and the continued focus on those Funds which remain open to liquidity, Charter Hall has suspended the LLF for CHUF effective from Friday 24 October 2008. This decision is made in light of the freezing of redemptions from the majority of CHUF's peers in the property, mortgage and income trust sector.
CHUF's investments remain well positioned in funds with close to full occupancy, high quality tenant covenants, long weighted average lease expiries and fixed annual rental growth. The Fund has also considerably outperformed its peers since inception, achieving a total return of 5.4% from 10 December 2007 through to 30 September 2008, in a challenging market environment for funds investing in unlisted and listed property markets.
- The Charter Hall Property Trust has a $58.8 million (28.8%) co-investment in the Fund;
- The Fund is ungeared and therefore has no debt facilities or covenants to monitor or manage;
- The Fund has provided a strong return relative to its peer-group over the period since inception to 30 September 2008;
- The LLF for the Fund has been temporarily suspended and the Fund has closed to applications effective from Friday 24 October 2008;
- The decision to suspend the LLF was made in light of the Fund being one of the few remaining funds open to liquidity in the unlisted property fund sector, where redemption requests have materially increased in recent weeks following the Federal Government's guarantee of cash deposits and the poor performance of the listed A-REIT sector;
- The Manager will consult with Unit Holders and their Financial Advisers and intends on re-opening the Fund following a review of its liquidity options at a time in the future when markets stabilise.