Charter Hall fund receives highest rating from Lonsec
Charter Hall’s third industrial vehicle for retail investors, the Charter Hall Direct Industrial Fund No.3 (DIF) has been awarded the highest rating from Lonsec Research; “Highly Recommended"1.
The “Highly Recommended” rating indicates that Lonsec “has very strong conviction the financial product can generate risk adjusted returns in line with relevant objectives. The financial product is considered a preferred entry point to this asset class or strategy”.
Charter Hall launched DIF3 in October 2014, following strong investor demand for the award winning DIF1 in July 2012 and DIF2 in November 2013. The fund is targeting to raise $150 million, which it will deploy into industrial assets that meet the fund’s investment mandate and strict investment criteria, covering location, lease term, tenant quality and occupancy.
Richard Stacker, Head of Charter Hall’s Direct Property business, said: “It’s a great achievement for DIF3 to have been awarded a “Highly Recommended” rating by Lonsec. This rating supports the overwhelmingly positive response we are receiving from investors and advisers wanting to invest into our third industrial fund.“High quality industrial property, with strong covenants on long leases, is attractive for investors as it offers access to an investment with stable and growing income, with the added benefit of tax-advantaged income,” Mr Stacker added.
DIF3 is forecasting an annualised return of 7.50% p.a. for the period to 30 June 2016, coming from high quality industrial property on long leases to financially strong tenants. The fund has a weighted average lease expiry (WALE) of over 13 years.
DIF3 has been seeded with interests in two assets located in Perth and Adelaide which are 100% occupied by Coles. The Coles Distribution Centre Perth sits alongside the Perth airport and occupies approximately 25 hectares of land. The Coles Distribution Centre Adelaide acts as the distribution centre for all of South Australia and Northern Territory and was the Australian distribution centre of the year for Coles in 2013.The two assets will represent just over a third of the fund’s target total size of $250 million.
Fund Manager, Steven Bennett, points to the increasing attractiveness of the industrial sector and the strong covenant advantage of DIF3.
“We believe the outlook for established Australian industrial precincts is strong, and expect further growth in the domestic economy and strong industrial property fundamentals.
“Industrial property has emerged as a strongly performing asset class delivering a total return of 12.1% over the 2014 financial year according to Investment Property Databank,” Mr Bennett said.
Taking advantage of the strength of a strong covenant, Mr Stacker said DIF3’s exposure to Coles, one of the country’s most recognised and well established brands, resonates with investors.
“Furthermore, with the cash rate currently sitting at 2.5% and investor confidence increasing, interest in direct property, which is providing a starting yield to investors of over 7% for high quality assets with moderate gearing, is proving to be a popular option,” Mr Stacker added.
Charter Hall was recently awarded the Australian Property Institute 2014 Australia Funds Management Award. DIF3 also received an “AA+” rating from independent rating house, Property Investment Research (PIR) in September 2014.
The minimum investment in DIF3 is $20,000, with distributions payable quarterly. DIF3 also has a wholesale offer for higher net worth individuals who invest larger amounts.
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