Charter Hall continues its Long WALE focus
Charter Hall today announced that the third fund in its successful Direct Industrial Fund series, DIF3, has purchased a third industrial property on a long term lease.
The newly acquired asset comprises an engineering facility of 31,700sqm situated on a substantial land parcel of approximately 75,500sqm located in Bassendean, WA.
The property, secured by a Parent Company Guarantee with Bradken Limited, has been acquired on a long term lease of 15 years taking the funds weighted average lease expiry (WALE) to 13.2 years with average fixed increases under the lease of 3% p.a.
Richard Stacker, Head of Charter Hall’s Direct Property business said: “Charter Hall’s ability to complete off market transactions is one of our key strengths. Our capabilities to access, deploy, manage and invest capital means that we are able to respond and transact on opportunities and work with our investors to create industry leading investment vehicles.
“The acquisition of this property is consistent with the DIF3 property investment strategy and builds on the fund’s existing portfolio, which includes two properties in Perth and Adelaide 100% occupied by Coles on long term leases. The new property is located near major transport infrastructure close to their key markets.
“Acquired on a passing yield of 8.5%, Charter Hall’s direct business continues to grow in popularity with investors, in particular SMSFs. To date investors have committed over $100 million into DIF3,” Mr Stacker said.
DIF3 is forecasting an annualised return of 7.40% p.a. for the period to 30 June 2016.
Charter Hall Fund Manager, Direct Property, Steve Bennett said DIF3’s exposure to strong covenants on long term leases provides stable income over the long term which resonates with investors.
“With the cash rate currently sitting at 2.0%, three year term deposits at 2.8% and the ASX 200 Dividend Yield at 4.5%, interest in direct property, which is providing a starting yield to investors of around 7.4% for high quality assets with moderate gearing, is proving to be a popular option.”
The Direct Industrial Fund series has a strong record of success for investors. The DIF series has outperformed the IPD/Mercer Pooled Property Index by 2% delivering an average return of 11.1% pa over four years.
DIF3 received an “AA+” rating from independent rating house, Property Investment Research (PIR) in September 2014.This is PIR's second highest rating indicating that PIR believes DIF3 is a superior grade product that has exceeded the requirements of a review process across a number of key evaluation parameters and scored exceptionally in a number of categories.
DIF3 is currently open to investment looking to raise $150 million, which it will continue to deploy into industrial assets that fit the fund’s investment mandate and strict investment criteria, covering location, lease term, tenant quality and occupancy.
Colliers International Director Industrial Raj Singh, who brokered the deal in conjunction with Colliers International Director Industrial Special Projects Wayne Chorley, said the facility had received strong interest during the off-market campaign.
“Local and off shore clients saw the value in this property given its location, large landholding and security of an ASX listed tenant on a long-term leaseback, which made it a very attractive proposition.”
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