Charter Hall launches second automotive retail property trust, expects to raise $48 million

Listed property manager Charter Hall Group’s Direct Property business has launched a second automotive retail property trust, seeking to raise $48 million in equity to acquire an $82 million property portfolio.

The portfolio will have a 13-year weighted average lease expiry (WALE) and the trust has acquired four properties in Sydney, Melbourne, Brisbane and Perth, said a media release.

The opening date for the equity raise offer is Tuesday, 16 May 2016 and is limited to $48 million.

The Charter Hall Direct Automotive Trust No. 2 (DAT2) follows the success of the first such trust, DAT1, in raising equity. DAT1 was launched in August 2015 and closed to new investment within six weeks of settlement of the property transaction on September 30, 2015. The assets have all been 100% leased by vehicle retailer Automotive Holdings Group (ASX:AHG) on long-term leases, whilst equity commitments are expected from retail, high net worth and self managed superannuation fund investors.

DAT2 would comprise a portfolio of established and new automotive dealerships, 100% leased to AHG and expects to offer stable earnings. The Trust will have an initial distribution of 7.25% for years one and two and the prospect of capital growth over the six-year initial period of the trust.

Charter Hall’s head of Direct Property, Nick Kelly said the DAT series was an example of the group’s success in with new funds that deliver strong returns to investors. 

“Our Direct Property business continues to deliver market leading returns for our retail investors and I am pleased with the consistent delivery of targeted income distribution yields. The DAT2 targeted distribution yield of 7.25% is expected to be appealing in this low interest rate, low inflation environment."

The DAT2 portfolio will be targeting an initial gearing of 49.9% and comprises the following properties and dealerships operated under AHG leases:

“We continue to see high levels of interest in direct property from SMSF trustees who, in a low yield environment, are seeking investments which provide for a strong income yield, high quality assets, and potential for capital value growth, low volatility and regular returns," Direct Property fund manager Steven Bennett said.

Charter Hall's Direct Property's funds hold five of the top 10 ranked positions in the Property Council/IPD Unlisted Core Retail Property Fund Index for the 12 months to January 2016.