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News Originally posted at afr.com

Charter Hall to seed new fund with Burnie’s Bunnings

September 13, 2017

Feeling the Burnie: The Bunnings Warehouse bought by Charter Hall. Photo: Supplied

Charter Hall has acquired a Bunnings Warehouse at Burnie in Tasmania for $21 million that will become one of the seed assets in a new unlisted fund.

The retail property was bought on a 6.1 per cent yield from a syndicate of private investors.

Led by David Harrison, Charter Hall will hold the property on its balance sheet until it launches its next fund, the Charter Hall Direct Diversified Consumer Staples Fund, or DCSF. That could be as early as next month.

“The Burnie property is strategically located in a land-constrained, core location with no direct competition providing an ideal long-term facility for Bunnings,” said chief investment officer Sean McMahon.

“The acquisition maintains the existing high-quality Charter Hall portfolio metrics and increases exposure to high-quality retail assets with strong tenant covenant customers.”

The Group is an integrated property group operating across property funds management, development, property investment banking, property management and property investment.

Wesfarmers-owned Bunnings has almost nine years left on its lease, and pays annual fixed increases of 3 per cent on its rent.

The 12,254-square metre Bunnings Warehouse stands on a 3.04-hectare site.

“We are proud to further expand our strong relationship with Wesfarmers and Bunnings Group which across the Charter Hall platform now exceeds $1.1 billion invested in 35 Bunnings Warehouse assets,” Mr McMahon said.

The Burnie property sale was handled by Burgess Rawson.

Attractive structure

“Bunnings leased investments continue to remain highly sought after by the market place predominantly on account of the Wesfarmers covenant, attractive net lease structure, guaranteed fixed rent reviews and the large strategic land holdings that are typically characteristic of a Bunnings site,” said Burgess Rawson director Darren Beehag said.

Charter’s proposed new fund – to be seeded by the Burnie property and others – will be based around a portfolio leased to companies which supply consumer staples.

The investment theme is a property portfolio with exposure to major local and international brands with resilient income streams.

Charter Hall has been cranking up the roll-out of unlisted funds across its $3 billion direct property business.

Last month it launched a $268 million unlisted fund of commercial property, including its latest acquisition, a Port Adelaide office development.

That fund will be known as the Charter Hall Direct PFA Fund. In total, Charter Hall has $19.8 billion of funds under management across the office, retail and industrial sectors.

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