ASX-listed commercial property fund manager, Charter Hall, has officially opened its doors to New Zealand investors as it seeks A$250 million in a new round of equity-raising for the group’s flagship unlisted Direct Office Fund (DOF).
While Charter Hall already counts New Zealanders as investors in its range of Australian commercial property funds (collectively valued at A$17.5 billion) the DOF offer is part of the manager’s inaugural launch of NZ-registered products.
Nick Kelly, Charter Hall head of direct property, said strong demand from New Zealand investors for “Australian investment grade commercial property” prompted the manager to offer the product under the trans Tasman mutual recognition regime.
“New Zealand residents can now invest with Charter Hall in New Zealand dollars and they can also receive dividends in New Zealand dollars,” Kelly said in a statement. “With the New Zealand dollar at near parity with the Aussie – the best rate in living memory – it’s an especially attractive time for New Zealanders to invest in blue chip Australian commercial property.”
According to the Charter Hall DOF product disclosure statement (PDS) published on the Disclose website, the fund is looking to grow its underlying portfolio of nine Australian capital city office buildings valued at A$842 million to over A$1.2 billion with the new capital-raising.
The manager has set the minimum investment level in the wholesale DOF units at A$20,000 with an initial term ending in December 2019.
“[In December 2019] all Investors will be offered the opportunity to redeem their investment if they elect to do so,” the PDS says. “Thereafter, the Fund will have rolling five-year terms.”
Kelly said Charter Hall had access to “a pipeline of high quality, well located Australian office property” to help build the DOF portfolio.
“DOF achieved a total return of 20.1% per annum in the 12 months to June 30, 2016. This compares to the benchmark (MSCI/IPD Australian Unlisted Wholesale Property Fund Index) return of 12.8% per annum over the same period,” he said. “DOF has provided investors with annualised distributions of 7.5 cents (AUD) per unit paid quarterly plus strong capital growth to date, which is forecast to grow to an annualised 7.75 cents (AUD) per unit for the year ending June 30, 2017.”
The DOF’s current distribution sits at 6.6 per cent, the Charter Hall statement says with investors able to buy units direct or via financial advisers.
Charter Hall manages a range of listed and unlisted property funds on behalf of institutional, wholesale and retail clients. According to the Charter Hall statement, the group is the largest manager of direct property funds for Australian retail investors with A$2.5 billion under management in the sector.
As well as the DOF, Charter Hall has registered its Direct Automative Trust No.2 in NZ under the trans-Tasman mutual recognition regime. The unlisted fund, which invests in four properties leased to Australia’s largest car retailer, is open for applications until October 31 this year, the PDS says.