New property fund focused on consumer staples tenants a first for investors… and Charter Hall 

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Charter Hall Group (ASX:CHC), one of Australia’s leading property investment and funds management groups with more than $20 billion under management, has launched a new direct property investment fund focused on tenants who are the producers and distributors of everyday consumer goods.

The Charter Hall Direct Diversified Consumer Staples Fund (DCSF) forming part of the $2.9 billion Charter Hall Direct Property division, Australia’s leading manager of unlisted property funds for retail investors including high net worth, self-managed super fund (SMSF) trustees and self-directed or advised investors.

DCSF, which is the first consumer staples themed property fund in the Australian unlisted property fund market, has a headline forecast income yield of 6.89% pa* plus the prospect of capital growth, with distributions paid monthly. Further, with the initial portfolio having 2.7% pa average rental increases, DCSF offers investors potential growth in income distribution and asset value.

DCSF’s diversified portfolio of predominantly Australian properties leased to companies that derive their revenue from the production or distribution of consumer staples provides investors with exposure to property assets leased by major Australian and international brands with resilient income streams.

Group Executive – Global Investor Relations at Charter Hall, Richard Stacker said: “Charter Hall Direct Property has a strong track record of creating institutional grade property investment opportunities available to high net worth, SMSF members and trustees and individual investors.”

“We believe the combination of solid yield, a monthly income distribution policy, the resilience of consumer staples entities as tenants, long leases and annual rental uplifts, make the Diversified Consumer Staples Fund an attractive investment option for investors.”

The fund’s initial portfolio comprises retail and industrial properties leased to leading Australian companies including Viva Energy, Bunnings and producers and distributors of smallgoods including Hans and Primo.

“Leading consumer staples companies have operated for decades through many economic cycles.  They tend to dominate the industry they operate in with high barriers of entry to new competitors. These features create a resilience to their earnings, providing an excellent tenant for landlords looking for security of cashflows from the underlying properties”.
All six properties in the fund are 100% leased and the 9.2 year weighted average lease expiry is in line with the Charter Hall investment philosophy of providing investors with exposure to quality assets, leased to high quality covenants on long leases. The geographically diversified properties are located in Queensland, New South Wales, New Zealand, Tasmania and Victoria.

Consumer staples products, such as food, petrol and everyday household items, have a low elasticity of demand.

“Consumers are generally unwilling to cut these types of non-discretionary items from their household budgets and consequently demand for them generally grows in line with population. They are not subject to the volatility of demand associated with more discretionary items and they are very often dominant brands with high levels of consumer loyalty,” Mr Stacker added.

As a direct (unlisted) property fund, DCSF is likely to have a low correlation to equities. The fund’s unit price is published daily on the fund’s web site.

The fund will have an initial investment period until its first liquidity window of five and a half years and we anticipate that monthly distribution payments will contain some tax deferred amounts.

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