Specialist property fund manager Charter Hall has launched a fund incorporating a multi-sector approach through investing in direct property assets with tenants that are producers and distributors of consumer staples.
The Charter Hall Diversified Consumer Staples Fund is the first unlisted property fund in the Australian market with a consumer staples investment theme and the first diversified multi-sector offering the manager has launched in the past five years.
“The strategy of the Consumer Staples Fund is to buy, and/or develop if they’re 100 per cent pre-leased to tenants, property assets with long-term leases that are broadly defined as consumer staples,” Charter Hall chief executive David Harrison told a media briefing in Sydney to launch the fund.
Harrison cited Woolworths and Wesfarmers as the types of company tenants the fund was looking at housing.
He pointed out there were compelling reasons as to why the consumer staples space presented a very strong investment opportunity for Charter Hall and its clients.
“In the US over 40 years … the consumer staples sector has had the second highest return and the second lowest volatility,” he said.
“It’s pretty basic. If you’ve got low volatility, you generally see a lower return, but importantly in our space that low volatility has led to a very, very low probability of a negative return in any one year.
“And those are really important things for our investors who are really investing for their retirement, both for current income and also building up capital.”
The fund will look to acquire a range of property types, including office buildings, distribution centres, manufacturing sites and retail stores.
Charter Hall global investor relations group executive Richard Stacker said the diversification investors demanded meant the manager could consider investing in different types of commercial property across different industries.
“[Investors] have asked for a diversified fund and looking at this sector, consumer staples, I think it was the one sector we looked at in terms of the thematic where we probably could cut across all three [property] sectors quite well and still have that resilience of income,” Stacker said.
“Additional things that we’re probably looking at that maybe we haven’t looked at traditionally within this business are service stations and one of the first assets of this fund actually is a service station.”
The fund is aiming to deliver investors an annual return of 6.89 per cent. Distributions will be paid monthly and a gearing target of between 30 per cent and 45 per cent will be used.
The offering has started with six fully occupied properties in its portfolio with an average lease term of 9.2 years.
