Strong investor demand sees Charter Hall launch highly rated third Direct Industrial Fund
Following strong investor demand for the award winning DIF1 in July 2012 and DIF2 in November 2013, Charter Hall has launched its third industrial vehicle, the Charter Hall Direct Industrial Fund No.3 (DIF3).
Charter Hall, which was recently awarded the API 2014 Australia Funds Management Award, is looking to raise $150 million for DIF3, which it will deploy into industrial assets that fit 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: “Since the closure of both DIF1 and DIF2, which raised a total of $250 million in equity, we’ve had an overwhelmingly positive response from investors and advisers wanting to invest into our next industrial fund. High quality industrial property, with strong covenants on long leases, offers investors access to an investment with stable and growing income, with the added benefit of tax-advantaged income.
“We have also seen strong investor appetite across other Charter Hall’s unlisted property funds that are invested into high quality office and retail property assets,” 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.
Taking advantage of the strength of a strong covenant, Mr Bennett 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 Bennett added.
DIF3 received an “AA+” rating from independent rating house, Property Investment Research (PIR) in September 2014.This is PIR's second highest recommendation given to DIF3. The rating indicates that PIR believes DIF3 is a superior grade product that has exceeded the requirements of our review process across a number of key evaluation parameters and scored exceptionally in a number of categories.
The minimum investment in DIF3 is $20,000, with distributions payable quarterly.
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