Advisers, investors and investment platforms demonstrate strong appetite for prime industrial property
Charter Hall Direct Property’s DIF2 raises $135m, closing oversubscribed
More than a year ahead of schedule Charter Hall Direct Property today announced that its Direct Industrial Fund No.2 (DIF2) has successfully closed oversubscribed raising $135 million within ten months of launch.
DIF2 was launched in December 2012 in direct response to demand from investors, self managed super funds (SMSFs) and financial advisers for a second vehicle providing exposure to prime industrial property, after the success of Charter Hall Direct Investment Fund (DIF1) which closed for investment in 2012. DIF2 was not expected to close until 31 December 2014.
Head of Charter Hall’s direct property division, Richard Stacker, said: “This demonstrates the continued appetite for DIF2’s mandate of a quality industrial property portfolio. DIF2 benefits from an asset base diversified across locations, income secured by long leases, quality tenant covenants and modern industrial facilities with low capital requirements.
The current portfolio of five assets has a total end value of $135million, weighted average lease term of 12.8 years and tenants that include Australia Post, Coles and Toll.
Mr Stacker said further assets that meet DIF2’s investment criteria are currently under consideration with the final portfolio expected to total approximately $220 million and have a targeted gearing level of 45%.
“Institutional investors, SMSFs and high-net worth individuals are becoming increasingly aware of the benefits of moving their investments from cash and term deposits to direct commercial property. Literally, less than three years ago term deposits were earning over double what they are now. Investors are on the search for yield and direct commercial property is a clear alternative,” he added.
Head of Retail Distribution for Charter Hall, Ross Victor, said that DIF2 was well supported across private banks, wealth divisions, licensees, and major platforms, including BT Wrap, Asgard, North, AMP Personalised Portfolio Service, Macquarie Wrap and Netwealth.
“It was exciting to see the inclusion of DIF2 as a ‘direct property’ option across investment and super/pension menus as a result of the fund’s innovative structure and the strong demand from advisers and SMSFs.
“This inclusion aligns investors seeking high quality direct property offerings, regardless of whether they own an SMSF or access retail super options on platforms,” Mr Victor said.
Despite the perception that SMSFs are primarily focusing on residential property investments, Mr Victor said that a significant portion of these investors are looking to commercial property given the higher yields available.
“At the end of the day, property is an asset class which people understand and commercial property provides a sense of security and stability that SMSF investors are seeking from an investment. Over 70% of fund flow into DIF2 is attributed to SMSF and high-net worth investors.
“Our SMSF investors found the ease of access to high quality commercial property, compliance with administration requirements for SMSF reporting, not having to manage tenants or property, conservative gearing in DIF2 and the higher yields were clear distinctions from residential investment,” Mr Victor added.
Mr Stacker added: “With direct property providing yields of over double that of cash and term deposits, there is a growing demand for alternatives which not only diversify an investment portfolio but provides solid total returns over the funds life.
“There is an increasing appetite from investors for prime industrial property which provides investors with an attractive yield and defensive investment characteristics such as long term leases, strong tenant covenants and fixed rental increases annually,” concluded Mr Stacker.
About Charter Hall
Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups, with over 22 years’ experience managing high quality property on behalf of institutional, wholesale and retail clients. Charter Hall has over $10 billion of funds under management across the office, retail and industrial sectors. The Group has offices in Sydney, Melbourne, Brisbane, Adelaide and Perth.
The Group’s success is underpinned by a highly skilled and motivated team with diverse expertise across property sectors and risk-return profiles. Sustainability is a key element of its business approach and by ensuring its actions are commercially sound and make a difference to its people, customers and the environment, Charter Hall can make a positive impact for its investors, the community and the Group.
For further information:
Head of Charter Hall Direct Property
T +61 2 8295 1011
M 0402 447 751
Senior Account Executive, Honner Media T + 61 2 8248 3753M 0407 660 firstname.lastname@example.org