Charter Hall investors have voted to extend the life of its direct trust which owns Bunnings warehouses as they seek high-yielding and less volatile property assets.
At a meeting of the Charter Hall Direct B W Trust, an unlisted property trust which holds four retail warehouse buildings in NSW and Victoria 100 per cent leased to Bunnings, investors voted overwhelmingly to extend the life of the trust by five years.
The head of Charter Hall Direct, Steven Bennett, said there remains demand from investors who are seeking quality managers to look after their savings and retirement income.
“The strong performance of the trust since its inception and the positive sentiment of investors towards investing in high grade commercial real estate underpinned by long leases to strong tenant covenants means that demand for commercial property investment opportunities is still strong,” Mr Bennett said.
The four properties in the trust comprise Bunnings Warehouse Armidale, NSW; Bunnings Warehouse Rouse Hill, Sydney; Bunnings Warehouse Taree, NSW; and Bunnings Warehouse Rosebud, Victoria with all four properties secured by new 10-year leases to Bunnings Warehouse.
Mr Bennett said the fund’s forecast distributions are 9.70¢ a unit per annum paid quarterly.
Demand for unlisted property funds has been high due to the sector’s outperformance against listed real estate investment trusts, which are impacted by two-pronged underlying property market and the share market.
Many REIT managers have unlisted and direct funds for investors and have made it clear they wish to expand their offerings.
Charter Hall, Dexus, GPT, Shopping Centres Australasia, Goodman and Vicinity Centres, among others, all offer a suite of funds.
In the half-year results, Dexus executive general manager, funds management, Deborah Coakley said the the establishment of the unlisted logistics vehicle unlocks the growth potential of the group industrial platform, “broadening our relationships and providing a stable long-term source of capital to invest alongside us through the cycle”.
According to a joint quarterly report from Zenith Investment Partners, MSCI and the Property Funds Association, direct property gave back a total return of 10.3 per cent to investors, for the 2018 year.
According to the report, Australian direct property income returns continue to be stable at
5.5 per cent for the period, although investor demand continues to compress yields to historic lows.
“The structural nature of real estate as a strong generator of low volatility income continues to attract capital flows in an environment where low bond yields have kept yield spreads attractive,” the report says.
“Increased globalisation of capital flows has also made cross border transactions an increasingly important driver of markets in the current property cycle.”