Charter Hall Direct Long WALE Fund - (LWF) - Hewison Private ...
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Charter Hall Direct Long WALE Fund (LWF) Product disclosure statement An unlisted property fund with an established and growing portfolio of predominantly long WALE Properties diversified across resilient property sectors and essential services. APIR Code MAQ5703AU
Important information No investment advice
The information contained in this PDS is not financial product advice.
The information contained in this PDS is general information only
Product disclosure statement and does not take into account your investment objectives, financial
This PDS relates to an offer to invest in Charter Hall Direct Long WALE situation and particular needs.
Fund (ARSN 622 080 979, APIR Code MAQ5703AU) (Fund). The Fund It is therefore important that you read this PDS in full before deciding
is a registered managed investment scheme under the Corporations whether to invest in the Fund and take into consideration your
Act. Applicants may submit an application to subscribe for Ordinary investment objectives, financial situation and particular needs. If
Units at any time while this PDS is on issue. you are in any doubt, you should consider consulting your financial
This PDS is dated 1 September 2020. Unless otherwise specified, all adviser, stockbroker or other professional advisers.
financial and operational information contained in this PDS is stated
as at the date of this PDS. Forward looking statements
ASIC takes no responsibility for the contents of this PDS and This PDS contains forward looking statements which are subject to
expresses no view regarding the merits of the investment set out in known and unknown risks, uncertainties and other important factors
this PDS. You should read this PDS in full before deciding whether to that could cause the actual results, performance or achievements of
invest in the Fund. If you are in doubt as to how to interpret or deal the Fund to be materially different from those expressed or implied in
with this document, you should consider consulting your financial such forward looking statements. Past performance is not a reliable
adviser, stockbroker or other professional advisers. indicator of future performance.
Responsible Entity Disclaimer
Charter Hall Direct Property Management Limited (ABN 56 073 623 An investment in Units is not an investment in, or a deposit with
784, AFSL 226849) (Responsible Entity or CHDPML) is the issuer of or other liability of, the Responsible Entity or any other member of
this PDS and the Units offered pursuant to this PDS. The Responsible Charter Hall Group and is subject to investment and other risks,
Entity has appointed Charter Hall Holdings Pty Limited (ABN 15 051 including possible delay in repayment and loss of income and
363 547) to act as manager of the Fund (Manager). capital invested. None of the Responsible Entity, the Manager, other
entities in Charter Hall Group, the Custodian or any of their respective
Custodian directors, officers or associates gives any guarantee or assurance as
The Responsible Entity has appointed The Trust Company (Australia) to the performance of the Fund or the underlying assets of the Fund
Limited (ABN 21 000 000 993, AFSL 235145) as the custodian of or the repayment of capital from the Fund or any particular rate of
the Fund (Custodian). The Custodian’s role is limited to holding the capital or income return from the Fund.
assets of the Fund as agent of the Responsible Entity. The Custodian
has no supervisory role in relation to the operation of the Fund and No representations other than contained in this PDS
is not responsible for protecting your interests. In accordance with You should only rely on the information in this PDS when deciding
the terms of the Custody Agreement, the Custodian has no liability whether to invest in the Fund. No person is authorised to give any
or responsibility to you for any act done or omission made. The information or to make any representation in connection with the Fund
Custodian makes no statement in this PDS and has not authorised or that is not contained in this PDS. Any information or representation
caused the issue of it. not contained in this PDS may not be relied upon as having been
authorised by the Responsible Entity in connection with the Fund.
Eligibility
The Offer made in this PDS is available only to those persons receiving Investment risks
this PDS (electronically or otherwise) within Australia or New Zealand. You should read this PDS in full before deciding whether to invest in
No action has been taken to register Units or otherwise permit a the Fund and if you are in any doubt, you should consider consulting
public offering of Units in any jurisdiction outside Australia or New your financial adviser, stockbroker or other professional advisers.
Zealand. Each Applicant shall be considered to have read and understood
This PDS does not constitute an offer or invitation in any place in section 5 of this PDS.
which, or to any person to whom, it would not be lawful to make such PDS availability
an offer or invitation.
This PDS may be viewed online on the Fund website. If you access the
The distribution of this PDS in jurisdictions outside Australia or electronic version of this PDS, you should ensure that you download
New Zealand may be restricted by law and persons who come into and read this PDS in full. A paper copy of this PDS is available free
possession of this PDS who are not in Australia or New Zealand of charge to any person in Australia by calling Charter Hall Group on
should seek advice on and observe any such restrictions in relation to 1300 652 790 (local call cost).
the distribution or possession of this PDS. Any failure to comply with
such restrictions may constitute a violation of applicable securities Updated information
laws. Information in this PDS may change from time to time. Information
Other than as permitted by law, investments in the Fund will only be that has changed in relation to the Fund that is not materially adverse
accepted on receipt of an Application Form. but which the Responsible Entity wishes to provide to Investors,
will be made available on the Fund website. A printed copy of any
New Zealand updated information will be available from the Responsible Entity free
Refer to section 11 for additional information for New Zealand investors. of charge upon request by calling Charter Hall Group on 1300 652 790
(local call cost). The Responsible Entity may issue a supplementary
Master trust or wrap accounts product disclosure statement to supplement any relevant information
The Responsible Entity authorises the use of this PDS as disclosure not contained in this PDS, in accordance with its obligations under the
to Indirect Investors who access the Fund through an IDPS or IDPS- Corporations Act. Any supplementary product disclosure statement
like scheme (known commonly as a master trust or wrap account) and updated information should be read together with this PDS. A
or nominee or custody service and those investors may rely on this copy of any supplementary product disclosure statement and other
PDS. Individuals or entities who invest in the Fund through a master information regarding the Fund will be made available on the Fund
trust or wrap account do not become Direct Investors. The operator website and a printed copy will be available from the Responsible
or custodian of the master trust or wrap account (IDPS Operator) Entity free of charge upon request.
will be recorded as the Investor in the Investor Registry and will be
the person who exercises the rights and receives the benefits as an Continuous disclosure
Investor. Reports and documentation relating to the Fund will be sent In accordance with ASIC Regulatory Guide 198 ‘Unlisted disclosing
to the IDPS Operator. Investors using these services should be aware entities: Continuous disclosure obligations’, the Responsible Entity
that they may be subject to different conditions from those set out in advises that it will fulfil its continuous disclosure requirements by
this PDS, particularly in relation to: way of website disclosure which complies with ASIC’s good practice
– arrangements for the application for and transfer of Units; guidance. Investors may access material information regarding the
Fund from the Fund website.
– fees and expenses; and
– distribution calculation and timing. Pictures of properties in this PDS
Indirect Investors in master trusts or wrap accounts should contact Unless otherwise specified, all pictures of properties in this PDS are
their adviser or IDPS Operator with any queries relating to an actual pictures of buildings or property which are assets (directly or
investment in the Fund using these services. indirectly) of the Fund.
Cooling off period Defined terms and financial information
Cooling off rights do not apply to Direct Investors and Indirect Definitions of certain terms used in this PDS appear in the Glossary in
Investors. section 12. References to currency are to Australian currency unless
otherwise specified, and references to times are to Australian Eastern
Standard Time (AEST) unless otherwise specified. Unless otherwise
specified or implied, references to years are financial year references.
Cover from top: 303 Stirling Highway, Claremont WA (Bunnings); 10 Lawrence Street, North Ipswich Qld (Convenience Retail);
33-39 Colbee Court, Phillip ACT (Healthcare).
Contents
Thinking of investing? 02
1 Key features 06
2 Charter Hall 08
3 Investment strategy 12
4 The Fund and the Offer 16
5 Risks 18
6 Fees and other costs 21
7 Taxation 25
8 Additional information 28
9 Key documents and Investor information 29
10 Fund policies and practices 31
11 New Zealand investors 36
12 Glossary 38
4 steps on how to invest 40
Application Form 41
1
Thinking of
investing?
This is why:
Diversified Long WALE High occupancy
Property Portfolio (weighted levels
across resilient average lease
sectors expiry) Properties
Income paid Potential for Capital growth
monthly tax-deferred potential
distributions
Unlisted property Five-year There are risks
funds have a low investment terms inherent in every
correlation to investment
equities
Charter Hall Direct Long WALE Fund
Investing?
More details The Manager
Charter Hall Group is one of Australia’s
The Fund targets quality properties
that have long leases to well regarded
tenants and structured rental increases,
– Charter Hall Direct Long leading property groups, investing in
commercial properties including office including properties with triple net
WALE Fund is an unlisted leases – where the tenant is responsible
buildings, supermarket anchored retail
property fund with an centres and industrial & logistics assets for all outgoings in addition to the rent
established and growing on behalf of institutional, wholesale, high payable. The current portfolio of assets
can be found on the Fund website.
portfolio of predominantly net worth and retail investors. Charter
Hall Group, its directors and senior Active portfolio management
long WALE Properties managers are aligned by investing
diversified across resilient Properties are actively managed to
alongside investors in many of the funds
generate a stable income return and
property sectors and they manage.
achieve capital growth. Each Property
essential services. Charter Hall Direct Property is part will be regularly assessed for its
– By investing in the Fund, of Charter Hall Group and is one of income outlook and strategic value
you have the potential to Australia’s leading direct property fund and Properties will be acquired and
managers. We have a strong track investments will be made subject to
receive sustainable and record managing unlisted property funds meeting the Fund’s investment criteria.
stable tax-advantaged since 1995. Our products are consistently Refer to section 3.
income paid monthly. highly rated by external research groups
Sustainable and stable income
and our skilled and motivated team
– Distributions are derived utilises their industry experience and The Fund aims to provide sustainable
from real properties with passion to deliver sustainable returns and stable tax-advantaged income paid
long-term leases and for our investors, with a focus on monthly. Income returns from direct
outperformance of fund benchmarks. property investments generally compare
annual rent increases. favourably with the income returns of
There is also the potential Direct property other asset classes. The level of risk
for capital growth. Direct property investments provide associated with an investment in the
– Investors should be aware attractive levels of income with the Fund is different to other asset classes.
benefit of potential capital growth. Please consider the risks associated
of the risks involved in They have a low correlation to and are with the Fund carefully before deciding
direct property funds, some less volatile than equities, and they whether to invest. The current income
of which are set out in generally offer higher income than yield for the Fund can be found on the
more defensive fixed interest or cash Fund website. The income yield for the
section 5.
options. The level of risk associated with Fund is calculated at a point in time
investment in direct property is different and will fluctuate when the distribution
to other asset classes. Refer to section amount or Unit Price changes.
5 for some of the risks associated with
Liquidity
an investment in direct property funds.
The Fund has rolling five-year terms. At the
Property sectors end of each term, there will be a Liquidity
Traditionally, investment in commercial Event, where the Responsible Entity will
property has been focused on the endeavour to provide all Investors with the
office, industrial and retail sectors. opportunity to redeem their investment if
However, alternative or specialty they elect to do so. In addition to Liquidity
sectors can provide strong returns Events at the end of each term, Limited
and diversification benefits within Withdrawal Offers are intended to be
a portfolio. For example, healthcare made. Refer to section 4.3.
asset performance can benefit from
Risks
demographic drivers, whereas office
property is largely correlated with the There are risks inherent in every
performance of the broader economy. investment. You should read this PDS in
full before deciding whether to invest in
The Fund
the Fund and if you are in any doubt, you
The Fund invests in predominantly long should consider consulting your financial
WALE Properties diversified across adviser, stockbroker or other professional
resilient property sectors, including advisers. Refer to section 5 for a summary
industrial & logistics, convenience and of the key risks relating to an investment
long leased retail, long leased hardware in the Fund.
and social infrastructure assets. The
Fund may also invest in other property
sectors that meet the investment criteria. 3
Charter Hall Direct Long WALE Fund
Commercial property provides an attractive
alternative investment to residential property,
shares and term deposits.
These asset classes have different liquidity and
risk profiles. Refer to section 5 for some of the
key risks associated with the Fund.
Above: 7 Burnet Road, Warnervale NSW (Industrial & Logistics)
Opposite: 288 Exhibition Street, Melbourne Vic (Social Infrastructure; Telstra Partnership investment).
51.0 Key features
1.1 Fund profile
Investment opportunity Section
The Fund aims to provide Investors with sustainable and stable tax-advantaged income and the potential
4
for capital growth. The Fund will achieve this with its diversified and growing portfolio of predominantly
long WALE Properties with a focus on resilient property sectors and essential services. The Fund will target
industrial & logistics, convenience and long leased retail, long leased hardware and social infrastructure
assets. The Fund may also invest in other property sectors that meet the investment criteria.
Offer Section
The Offer made under this PDS is for investors to subscribe for Ordinary Units in Charter Hall Direct Long
4.2
WALE Fund.
Distributions Section
Distributions will be paid monthly in arrears. Historical distributions can be found on the Fund website. Past
4.4
performance is not indicative of future performance.
Fund term and liquidity Section
The Fund has rolling five-year terms.
4.3
The Initial Term ends in or around May 2023. Thereafter, the Fund will have rolling five-year terms.
At the end of each five-year term, there will be a Liquidity Event where, subject to its obligations at law,
the Responsible Entity will endeavour to provide liquidity for all Investors wishing to redeem all or some
of their investment. In the event that the Responsible Entity is unable to redeem Units at a Liquidity Event,
subject to law, it will continue to work to provide liquidity for those Investors. In certain circumstances,
the Responsible Entity may suspend Liquidity Events or Limited Withdrawal Offers. Direct property
investments, such as the Fund, are by their nature illiquid investments.
Limited Withdrawal Offers are intended to be made every six months, subject to the Fund having available
liquid assets. The amount made available under each Limited Withdrawal Offer will be notified to Investors
at the time an offer is made.
Investment strategy Section
The Fund’s investment strategy is to:
3
–– invest in properties in resilient property sectors located in Australia, for the medium to long term and actively
manage them to increase their value and income growth prospects;
–– grow the rental income of the Fund by targeting properties with a quality anchor tenant on long leases with
structured rental increases, including properties with triple net leases to tenants in essential services;
–– seek investment opportunities, including co-investment opportunities through Charter Hall Group’s
investment pipeline, its joint venture partners and others in accordance with clear investment criteria; and
–– regularly review and rebalance the Portfolio, including where appropriate, selling Properties to maximise risk
adjusted returns for Investors.
Occupancy and average lease term Fund website
The Fund is targeting long WALE properties and occupancy above industry benchmarks and a minimum
seven-year target average lease term (weighted by income). The current occupancy and average lease
term can be found on the Fund website.
Charter Hall Direct Long WALE FundCurrent Portfolio Section 3
The current Portfolio of assets can be found on the Fund website.
Fund website
As at the date of this PDS, the Portfolio comprises a direct interest in two healthcare Properties, two
Bunnings Properties, three industrial & logistics Properties, two convenience retail and two other retail
Properties. The Fund also has an investment in a Charter Hall managed wholesale investment partnership
which invests in a portfolio of communications infrastructure assets leased to Telstra.
As at the date of this PDS, the Portfolio is valued at $200.3 million and has a WALE of 7.9 years.
Fund debt Section
The Responsible Entity has a gearing target for the Fund of 30% to 45%. Gearing may be temporarily
10.1
higher in order to settle Property acquisitions or Portfolio investments with subsequent proceeds from the
Offer used to reduce the Fund’s gearing in line with the gearing target. Gearing may also be lower from
time to time if the Responsible Entity determines it is prudent to be so.
Unit Price Section 8
The current Unit Price can be found on the Fund website.
Fund website
Fees and costs Section
Certain one off and ongoing fees are payable in relation to an investment in the Fund. Direct Investors may
6
also elect to pay their adviser an upfront and/or ongoing professional fee for service.
Risks Section
You should read this PDS in full before deciding whether to invest in the Fund and if you are in any doubt,
5
you should consider consulting your financial adviser, stockbroker or other professional advisers.
1.2 Important Offer information
Minimum Application Amount: $20,000
The Responsible Entity may waive the minimum Application Amount
requirements in its discretion.
Fund website: www.charterhall.com.au/lwf
72.0 Charter Hall With over 29 years’ experience in property investment and funds management, Charter Hall Group (ASX: CHC) is one of Australia’s leading fully integrated property groups. We use our property expertise to access, deploy, manage and invest equity across our core sectors – office, industrial & logistics, retail and social infrastructure. Acting in the best interest of customers and communities, we combine insight and inventiveness to unlock hidden value.
The images in this section 2 are of Charter Hall Group offices, not images of underlying fund properties.
The impacts of what we do are far-
reaching – from helping businesses
succeed by supporting their evolving
workplace needs, to providing
investors with superior returns for a
better retirement, we’re driven to go
further.
92.1 Key management
Peeyush Gupta AM FAICD
Independent Chairman of the Responsible Entity
Peeyush was co-founder and the inaugural Chief Executive Officer of Ipac Securities Limited, a
pre-eminent wealth management firm. He has experience in starting and growing businesses,
general and investment management, and corporate governance. He is a Non-Executive
Director of National Australia Bank Limited, BNZ Life, Link Group, Insurance & Care NSW,
and SBS. He also serves in a pro bono capacity on the Australian School of Business Dean’s
Advisory Committee and as a Trustee of Western Sydney University.
Peeyush holds a Master of Business Administration in Finance from the Australian Graduate
School of Management and a Bachelor of Arts in Computing Studies from the University of
Canberra. He is also an alumnus of Harvard Business School. He was awarded a Member of the
Order of Australia (AM) in January 2019 for significant service to business and the community
through governance and philanthropic roles.
Rick Higgins
Independent Director of the Responsible Entity
Rick is a property professional with over 45 years of experience, having provided valuations
and consultancy advice to a range of large institutional clients relating to a broad range of
properties.
Rick was the National Director of Retail Business Development for Colliers International. Before
that, he was employed by Jones Lang Wootton for 30 years as National Director responsible
for the National Valuation and Consultancy Division. Rick is a Fellow of the Australian Property
Institute (FAPI).
Claire Keating
Independent Director of the Responsible Entity
Claire is a professional non-executive director and independent consultant. Her current
directorships include AustralianSuper, SAS Trustee Corporation (State Super NSW), Victorian
Managed Insurance Authority, Yooralla and the Judicial Commission of Victoria.
Claire has over 25 years specialising in internal and external audit and consulting to Australia’s
largest fund managers and superannuation funds.
She was a partner of PricewaterhouseCoopers (PWC) from 2002 to 2016 where she held
a number of management roles within PwC, including leading PwC’s Financial Services
Assurance Practice in Melbourne and was National leader of the PwC Investment Management
Assurance sector.
Claire is a member of Chartered Accountants Australia and New Zealand, a graduate of
the Australian Institute of Company Directors and a member of the Australian Institute of
Superannuation Trustees.
Charter Hall Direct Long WALE FundDavid Harrison
Executive Director of the Responsible Entity
B.Bus (Land Economy), FAPI, GDipAppFin
With a specific focus on strategy, David is responsible for all aspects of the Charter Hall
business. Recognised as a multi-core sector market leader, David has over 33 years’ global
property market experience and has led transactions exceeding $40 billion of commercial,
retail and industrial property assets. Under his stewardship, the Charter Hall Group portfolio has
grown from $500 million to $41.8 billion of assets under management.
David is a Fellow of the Australian Property Institute (FAPI) and Property Male Champion of
Change. He is Vice-President of the Property Council of Australia, Chair of the Audit and Risk
Committee and a member of the Nominations Committee. Director since 14 April 2016, National
Vice-President since 30 March 2017.
David’s vision for Charter Hall is to ensure we always deliver on our promise of putting people
at the heart of all we do and that our team members are given opportunities to excel in their
service to customers.
Richard Stacker
Executive Director of the Responsible Entity
B.Bus (Accounting and Finance), CA
Richard’s multi-sector experience, and previous roles leading Charter Hall Group’s global investor
relations team, where he directly led the raising of global capital for pooled funds, new investor
partnerships and joint ventures and also led the highly successful Direct business, have given him
a unique insight into the needs of customers. This is in addition to his 25+ years’ experience in
real estate funds management, real estate finance, accounting and risk management.
Now responsible for heading the industrial & logistics business, Richard is looking to grow it
with Charter Hall Group’s investor and tenant-customer base, while ensuring the team has the
opportunity to grow their individual careers along the way.
Driven by an ethos of creating better futures, Richard never loses sight of why we’re here,
putting this purpose into action every day – meeting with individual customers and businesses
to define their requirements, and how to shape the best solution. He believes Charter Hall
Group’s willingness to partner with investors across sectors – to live their aspirations and
collaborate internally to make it happen – is one of the many ways that sets Charter Hall apart.
Steven Bennett
Direct CEO
B.Bus (Finance and Economics), CA
Steven manages more than $5 billion of Australian real estate on behalf of self managed super
funds, high net worth and direct investors. His day-to-day responsibility includes overseeing
asset management and tenancy matters, managing the financial structure of the funds and
stakeholder communications.
For Steven, it’s never just about the end result: the journey to getting there is equally important.
By speaking directly with investors, he and his team are able to gather insights into the
real-world financial goals they hope to achieve. Whether it’s a regular income to support
their lifestyle or provide a better retirement, Steven is driven by expertise, integrity and
professionalism to realise outstanding outcomes.
In April 2019, Steven was elected President of the Property Funds Association, where he’s
committed to furthering the association’s goals: representing direct property investors’ and
managers’ interests; promoting the industry; and providing a forum for research and education.
Before joining Charter Hall Group, Steven worked for Macquarie Group Limited in both their
Sydney and London offices.
Miriam Patterson
Fund Manager of the Fund
B.Com (Accounting and Finance), B.Sc (Applied Mathematics), CA
Miriam is fund manager for the Charter Hall Direct Long WALE Fund. She has 15 years’ experience
in property and infrastructure funds management and brings a diverse range of skills in portfolio
and risk management, transactions, asset management and investment governance. Miriam
has prior experience working for a large superannuation fund where she headed up a $4 billion
global real estate and infrastructure portfolio spanning both public and private markets.
Miriam is a member of the Chartered Accountants Australia and New Zealand and a member of
the Australian Institute of Company Directors.
113.0 Investment strategy Why diversified portfolios? Generally, the more diversified a portfolio, the lower the potential impact of an adverse event on income or capital. Diversified portfolios can also provide a mix of growth and defensive assets. Growth assets can offer higher long- term capital gain, while defensive assets help reduce performance volatility. All commercial property benefits from population and economic growth. However, individual sectors have varied impacts from particular drivers. The traditional property sectors are: Industrial & logistics Office Retail Industrial & logistics property Office property demand is largely Non-discretionary retail property typically benefits from the provision correlated to economic and generally grows in line with the of infrastructure, goods movements employment growth. population, and has lower sensitivities and more recently, changes in to market shocks. technology and e-commerce. Some of the other specialty sectors favoured by Charter Hall that the Fund can invest in include: Social infrastructure Long leased Convenience retail These are assets that deliver social hardware Convenience retail property includes and community services, including service stations. Unlike traditional retail healthcare, education, energy, Long leased hardware is a sub-set property, they are characterised by long technology and transport. They have of the retail sector, and includes leases to single tenants. limited substitutability, together with assets leased to Bunnings. They are a measurable economic and social characterised by their large format, benefit. They tend to have strategic strategic locations, strong tenant locations and specialised features, covenant and high investor demand. with long WALEs often to single tenants. Charter Hall Direct Long WALE Fund
Fund investment strategy and criteria
The Fund aims to provide Investors with sustainable and stable tax-
advantaged income and the potential for capital growth. The Fund will
achieve this with its diversified and growing portfolio of predominantly
long WALE Properties with a focus on resilient property sectors and
essential services. The Fund will target industrial & logistics, convenience
and long leased retail, long leased hardware and social infrastructure
assets. The Fund may also invest in other property sectors that meet the
investment criteria.
The Fund’s investment strategy is to:
Invest in properties Grow the rental Seek investment Regularly review and
in resilient property income of the Fund by opportunities, including rebalance the Portfolio,
sectors located in targeting properties co-investment including where
Australia, for the with a quality anchor opportunities, through appropriate, to sell
medium to long term tenant on long leases Charter Hall Group’s Properties to maximise
and actively manage with structured rental investment pipeline, risk adjusted returns
them to increase their increases including its joint venture for Investors.
value and income properties with triple partners and others in
growth prospects. net leases to tenants accordance with clear
in essential services. investment criteria.
The Responsible Entity aims to make investments having regard to the following clear criteria:
Investment criteria
Property type Well located properties with a focus on resilient property sectors.
Tenants Well regarded tenants to provide a secure and stable income stream.
Location The Fund will target Properties located in Australia.1
Average lease term At the time of acquisition, the Property will not reduce the Portfolio’s average lease term below
seven years.
Occupancy Target long WALE properties and occupancy above industry benchmarks.
Development To reduce risks associated with development, any direct Property acquired that is subject to
development will have an approved development application and an agreement for lease over the
majority of the Property.
Co-investments All co-investments will be in high quality investment opportunities alongside Charter Hall’s
institutional funds, listed funds, partnerships or major Australian or international investors.
The Responsible Entity may revise the investment criteria or strategy from time to time, having regard to the best interests of
Investors. Changes to the investment criteria or strategy will be communicated to Investors via the Fund website or in writing.
The Responsible Entity may give effect to these investment criteria by taking an interest in funds or trusts (including funds or
trusts managed by other entities). Refer to section 8.7.
Note:
1. As at the date of this PDS, the Fund is invested in a Property located at 365-375 Tremaine Avenue, Palmerston North, New
Zealand. All future acquisitions will be located in Australia.
13The Portfolio
As at the date of this PDS, the Portfolio comprises a direct interest in two
healthcare Properties, two Bunnings Properties, three industrial & logistics
Properties, two convenience retail and two other retail Properties. The Fund
also has an investment in a Charter Hall managed wholesale investment
partnership which invests in a portfolio of communications infrastructure
assets leased to Telstra. As at the date of this PDS, the Portfolio is valued at
$200.3 million and has a WALE of 7.9 years.
The current Portfolio of assets can be found on the Fund website.
Portfolio diversification by sector1 Portfolio diversification by location
(by income) (by value)
NZ
Convenience Retail 5%
18% Tas NSW
20% 10%
Bunnings
27%
SA
1%
Retail
ACT Qld
16%
9% 32%
Industrial &
Social WA
Logistics
Infrastructure 19%
21% Vic
18%
4%
Top five tenants 27%
(by income)2
10%
10%
8%
4%
Note:
1. Portfolio diversification by sector has been calculated based on the income attributable from each tenant in the Fund.
2. A
ustralian Portfolio only. It is expected that the Property at 365-375 Tremaine Avenue, Palmerston North New Zealand will be
marketed for sale in the medium term.Portfolio summary
Direct Property
Property Valuation1 Capitalisation Lease term Occupancy Tenants
rate (by income)2 (by income)
303 Stirling Highway, $35.0 million 5.00% 6.5 years 100% Bunnings (91%) + 3 other
Claremont WA tenants
Long Leased Hardware
108B Albert Street, $30.5 million 5.50% 3.7 years 89% Priceline (27%) + 5 other
Brisbane Qld tenants
Retail
1-5 Reeves Street, $24.4 million 5.75% 5.8 years 100% Bunnings Group Limited
South Burnie Tas (100%)
Long Leased Hardware
3 Production Street, $17.0 million 6.75% 9.8 years 100% Hans Continental
Wacol Qld Smallgoods (100%)
Industrial & Logistics
10 Derwent Park Road, $15.2 million 7.25% 6.8 years 100% Baby Bunting (31%) + 3
Hobart Tas other tenants
Retail
365-375 Tremaine $10.9 million 6.75% 8.9 years 100% Premier Beehive NZ (100%)
Avenue, Palmerston
North, New Zealand3
Industrial & Logistics
33 Egan Court, $9.8 million 5.15% 9.3 years 100% Healius (100%)
Belconnen ACT
Social Infrastructure
33-39 Colbee Court, $8.4 million 5.15% 9.2 years 100% Healius (100%)
Phillip ACT
Social Infrastructure
7 Burnet Road, $7.9 million 6.00% 5.7 years 100% NFD Food Services Pty
Warnervale NSW Ltd (Superior Food Group)
Industrial & Logistics (100%)
3-5 Classic Way, $7.8 million 6.00% 4.4 years 100% Red Rooster (30%) + 5
Burleigh Waters Qld other tenants
Convenience Retail
10 Lawrence Street, $7.0 million 6.00% 6.5 years 100% Viva Energy Australia Pty
North Ipswich Qld Ltd (Coles Shell Service
Convenience Retail Centre) (84%) + 1 other
tenant
Investments
Investment fund Value of Average Average lease term Average Tenants
investment4 capitalisation (by income) occupancy (by income)
rate of
investment
fund
Telstra Partnership $26.4 million 4.44% 20.0 years 100% Telstra (100%)
Social Infrastructure
Total (direct Property $200.3 million 5.76% 7.9 years 98% 27 tenants (26 direct and
and investments)3 1 indirect)
Note:
1. Independently valued at 30 June 2020.
2. WALE as at the date of this PDS.
3. It is expected that the Property at 365-375 Tremaine Avenue, Palmerston North, New Zealand will be marketed for sale in
the medium term. The Property was valued at $11.7 million New Zealand dollars (NZD) as at 30 June 2020. This has been
disclosed in Australian dollars (AUD) at the prevailing spot rate as at 30 June 2020, being 1.00 AUD to 1.07 NZD.
4. Look-through value of the gross investment amount as at the date of this PDS.
154.0 The Fund and the Offer
4.1 Structure of the Fund 4.3 Fund term and liquidity In the event that the Responsible Entity
is unable to redeem Units at a Liquidity
The Fund is a unit trust domiciled in The Fund launched on 23 October
Event, subject to its obligations at law, it
Australia and registered as a managed 2017 and has rolling five-year terms.
will continue to work to provide liquidity
investment scheme under the relevant The Initial Term ends in or around May
for those Investors.
provisions of the Corporations Act. 2023 (the Initial Term was five and a half
years). Thereafter, the Fund will have Limited Withdrawal Offers
CHDPML has been appointed as the
rolling five-year terms. Limited Withdrawal Offers are intended
responsible entity of the Fund and as
such is responsible for all aspects of the At the end of each five-year term, all to be made every six months, subject to
management and administration of the Investors will be offered the opportunity the Fund having available liquid assets.
Fund. to redeem their investment if they elect The amount made available under each
to do so. In addition to Liquidity Events, Limited Withdrawal Offer will be notified
Limited Withdrawal Offers are intended to Investors at the time an offer is made.
4.2 The Offer It is expected that, in aggregate
to be made every six months.
The Responsible Entity is seeking to $5 million will be made available each
raise equity for the Fund to acquire All redemptions through liquidity year under Limited Withdrawal Offers.
Properties that satisfy the investment opportunities will occur at the Exit Price.
criteria. Provided the Fund has sufficient
Liquidity Events and Limited Withdrawal available liquid assets to do so, the
Successful Applicants under the Offer Offers may be cancelled, deferred, Responsible Entity will aim to satisfy
will be issued Ordinary Units. Refer to scaled back or suspended in accepted redemption requests made in
section 8.2 for more details. Units to exceptional circumstances such as response to a Limited Withdrawal Offer
be issued pursuant to the Offer will where it is impracticable to offer liquidity within 21 days of the closing date of the
be issued each Business Day at the or it would not be in the best interests Limited Withdrawal Offer.
prevailing Unit Price plus any Buy Spread of remaining Investors for liquidity to be
(Entry Price). Any Buy Spread will be offered. The Responsible Entity has discretion
notified on the Fund website. to delay or suspend redemptions, or
Liquidity Events to scale back redemption requests on
The Responsible Entity may, in its At the end of each term, there will be a proportionate basis, including in the
discretion, accept or reject applications a Liquidity Event where, subject to its event that demand for redemptions
in whole or in part or issue fewer Units obligations at law, the Responsible Entity pursuant to any Limited Withdrawal
than are applied for. will endeavour to provide liquidity for all Offer exceeds the Fund’s available
The daily cut-off for applications is Investors wishing to redeem all or some liquid assets. The Responsible Entity
2pm AEST. If the Responsible Entity of their investment. The first Liquidity may determine that such other terms
receives a completed Application Form Event will be in or around May 2023. and conditions will apply to Limited
and Application Amount before or at Withdrawal Offers from time to time.
At a Liquidity Event, the Responsible
2pm AEST, Units will be allotted at the These terms and conditions will be
Entity will communicate formally with
Entry Price applicable at the close of communicated to Investors at the time
Investors, providing an outline of the
business that day. If the Application of the Limited Withdrawal Offer.
liquidity strategy proposed, and the
Form or Application Amount is received forecast price that Investors will receive Limited Withdrawal Offers may be
after 2pm AEST, the Responsible Entity if they redeem Units. Investors will be advised to Investors by any means as
will apply the Entry Price for the next provided with a withdrawal request form determined by the Responsible Entity,
Business Day. prior to each Liquidity Event. including by publishing the Limited
Withdrawal Offer on the Fund website
To provide liquidity, the Responsible
or including information in the Fund’s
Entity may:
quarterly update. Ordinarily, Limited
–– sell one or more Properties; Withdrawal Offers will open in the
–– raise new equity for the Fund; month following the June or December
quarter end, close in the second month
–– reconsider the gearing ratio of the Fund;
following quarter end and be paid in the
or
third month following quarter end.
–– undertake a combination of these or
other measures. Limited Withdrawal Offer payments will
be made at the Exit Price, being the
Liquidity Events would not be offered if
Unit Price less any Sell Spread. Refer to
the Fund is listed.
section 8.1.
Charter Hall Direct Long WALE Fund4.4 Distributions Tax-deferred amounts arise through 4.5 Fund historical financial,
the different treatment of expenses and
Distribution policy
depreciation allowances on buildings
Unit Price and distribution
The Responsible Entity intends to and plant and equipment within a information
pay income distributions as set out building for accounting and taxation The Fund’s historical financial reports,
in section 1.1. Distributions will be purposes. For further information on the Unit Prices and distributions can
paid from the Fund’s income from tax implications of investing in the Fund, be found on the Fund website. Past
Properties or other investments and refer to section 7.1. performance is not indicative of future
will be determined by dividing the total performance (refer to sections 8.1 and
amount available for distribution (as Changes in the amount of depreciation,
10.5). Future Unit Prices and distributions
determined by the Responsible Entity interest rates, the level of gearing
are subject to risks (refer to section 5).
and referable to the entitlement of and other risk factors may influence
Ordinary Units) for any given period the actual tax-deferred amounts of a
by the number of Ordinary Units on distribution.
issue on the last day of the distribution Tax-deferred amounts
period. The Responsible Entity intends
A portion of distributions are currently
that distributions will be paid from the
tax-deferred. The Responsible Entity
Fund’s cash from operations (including
anticipates that distribution payments to
proceeds of sale and excluding
holders of Units may contain some tax-
borrowings) available for distribution.
deferred amounts in the future.
However, from time to time for short
periods, the Fund may pay distributions Distribution reinvestment plan
from other sources such as equity. Instead of receiving distributions as
This may occur when equity has been cash payments, Australian and New
raised but not yet deployed to acquire a Zealand Direct Investors may reinvest
Property or Properties. all of their distribution entitlement
To this end, the Responsible Entity for Ordinary Units by indicating their
intends, over time, to distribute the preferred option on the Application
whole of the Fund’s distributable income Form.
calculated in accordance with the Any distribution reinvested will be
Constitution. In doing so, a portion of invested at the ex-distribution Entry
distributable income may be retained in Price prevailing on the last day of the
one period to smooth distributions and/ period. The Responsible Entity may, in
or provide additional working capital for its discretion, elect to provide Direct
future periods. Investors with a discount for Ordinary
Distribution payments Units issued under the distribution
reinvestment plan. The current discount
All distributions are calculated in
for the distribution reinvestment plan
Australian dollars. Distributions for
can be found on the Fund website.
Australian Investors will only be paid in
Australian dollars directly into a bank Direct Investors can vary their
account or other account with a financial participation in the Fund’s distribution
institution where there is a branch in reinvestment plan by providing the
Australia. New Zealand Investors may Responsible Entity with a minimum of 10
elect to have their distributions paid in Business Days’ notice in writing.
New Zealand dollars to a New Zealand
bank account, with the Australian dollar Full terms of the distribution
distribution converted to New Zealand reinvestment plan are available from
dollars at a spot exchange rate. the Fund website or by contacting the
Responsible Entity. If for any reason
If valid bank account details are not in the future the Responsible Entity
provided, this may delay the processing terminates or suspends the distribution
of an Applicant’s application and/ reinvestment plan, all distributions from
or an Investor’s distribution payment. the Fund will be paid into Investors’
Distributions will not be paid by cheque. nominated bank accounts.
175.0 Risks
As with all investments, an investment 5.1 Property investment risks Capital expenditure
in the Fund will be subject to risks, There is a risk that capital expenditure
These risks relate to direct investing in
some of which are outside the control could exceed expectations, resulting in
real estate:
of the Responsible Entity, the Manager increased funding costs and therefore
and their directors. If they eventuate, Property values and sale prices lower distributions.
these risks may reduce or suspend The ongoing value of a property is
your distributions from the Fund and/ Market conditions
influenced by many factors including
or reduce the capital value of your supply, demand, capitalisation rates, The ongoing value of properties is
investment. An investment in the Fund rentals, lease terms, government influenced by changes in real estate
may lead to a loss of income and capital regulation and legislation, property market conditions, such as increases in
invested. Before deciding whether to markets, and economic conditions. supply or falls in demand in any of the
invest in the Fund, you should consider There is no guarantee that the Property real estate market sectors, or a change
your attitude towards the following, and Portfolio will achieve a capital gain, or that in the capitalisation rates considered
other, potential risks. sale prices will be in excess of valuations appropriate by valuers or otherwise
as at the date of this PDS, or that the generally applied in the market.
The risks discussed below are not an
exhaustive list. It is the Responsible value of the Property Portfolio will not fall Property liquidity
Entity’s current opinion that the as a result of the assumptions on which
Direct property investments are by their
following are key risks of an investment the relevant valuations are based proving
nature illiquid investments. If it becomes
in the Fund: to be incorrect.
necessary for the Fund to dispose of
–– property investment risks – including In periods of uncertainty, CHDPML may the Fund’s assets to fund redemptions
the risk that property values may decline obtain more frequent independent or to lower gearing, there is a risk that
and the risk that there is a decrease in valuations. the Fund may not be able to realise
Fund income; sufficient property assets in a timely
Property revenue
manner or at an optimal sale price. This
–– property development risks; The Fund’s income is largely dependent may affect the Responsible Entity’s
–– Fund investment risks – including upon the tenants paying rent in ability to return capital to Investors and
the limitations on the liquidity of your accordance with the lease terms. There may reduce the NTA per Unit.
investment, investment horizon and is a risk that a tenant may default on
gearing; and the terms of the lease or that the Fund Environmental contamination
–– general investment risks – including that does not provide agreed minimum Property income or valuations of the
the economy and market conditions service standards, either of which could Properties could be adversely affected
may affect asset returns and values. result in a reduction in rental income by:
for the Fund, and additional expenses
These risks are outlined in more detail –– discovery of an environmental
associated with re-leasing the tenancy
below. You should read this PDS in full contamination; or
or enforcement action. There is also a
before deciding whether to invest in –– incorrect assessment of costs
risk that through agreement or through
the Fund and consider consulting your associated with an environmental
requirement of government regulation or
financial adviser, stockbroker or other contamination or with property
legislation, CHDPML may provide rental
professional advisers. preservation. This risk may occur
deferral, rental abatement or waiver of
As well as considering the risks below, rent, to tenants. irrespective of whether the
you should also consider how an contamination was caused by the Fund
Vacancy periods or periods of rental or prior owners.
investment in this product fits into your
deferral, abatement or waiver may
overall investment portfolio. Technology
have an adverse impact on the Fund’s
net income and distributions, the There is a risk that there may be
Fund’s ability to comply with its debt advances and changes in technology
covenants, the Property’s capital value and changes in tenant requirements
and potentially the NTA per Unit. and expectations with respect to
commercial property. This may
Property acquisitions adversely impact on a tenant’s desire to
The Responsible Entity is seeking to extend their lease of a Property and may
progressively acquire for the Fund, a increase the Fund’s re-leasing risk.
diversified portfolio of Properties. While
Properties will be acquired subject to
meeting the Fund’s investment criteria,
there is no guarantee that future
Properties will be able to be acquired
on terms that do not impact the Fund’s
income yield.
Charter Hall Direct Long WALE Fund5.2 Property Net capital gains Fund listing, reorganisation, restructure
or stapling
development risks The Fund is already established and holds
existing Properties. There is a risk that a The Constitution allows the Responsible
Properties may be subject to
capital gain or loss may be realised by Entity to list the Fund or implement any
development. Development properties
the Fund if an existing Property is sold. reorganisation or restructure of the
are subject to additional risks
Any capital gain will be distributed to capital of the Fund or stapling without
associated with the timing, completion
Investors and will need to be included Investor consent or approval.
and cost of the development. For
in the calculation of the Investor’s net
example, completion of delivery of Debt facility and interest rates
capital gain or loss for an income year.
the developments may be delayed
As at the date of this PDS, the existing There is a risk that a debt facility or an
(including due to unforeseen
Portfolio (including the Telstra Partnership interest rate hedge (i.e. fixing the interest
circumstances, contractor default
investment) has an aggregate CGT cost rate) may not be available on the same
and weather), costs associated with
base of $195.4 million, compared to the terms upon extension or refinancing, or
the development may be more than
Portfolio valuation of $200.3 million. The when new finance or hedging strategies
anticipated or counterparties involved
current CGT cost base can be found on are sought.
in the development may default. Any
the Fund website. The issue price of Units
of these circumstances may have an There is also a risk that interest rates
will not be adjusted for any future capital
adverse financial impact on the Fund. may rise. These risks may have a
gain which may be payable on the sale of
These risks are substantially mitigated material adverse impact on the Fund’s
a Property. Investors who acquire Units
by virtue of the Fund following the activities, financial position and
may receive a capital gain (and potentially
investment criteria as they relate to distributions.
incur a tax liability in respect of that gain)
development arrangements.
when a Property is sold, calculated by Environment
reference to the difference between the There is a risk that the Fund may be
5.3 Fund investment risks cost base and the net sale price of that required to remediate a site to comply
These risks relate specifically to an Property and their proportionate interest in with environmental laws or building code
investment in the Fund: the Fund. Investors who acquire Units may regulations which may be at significant
also receive a capital gain when a fund cost.
Liquidity that the Fund invests in sells a property.
There is no guarantee that the The impact of this will depend on a Joint venture and Fund investments
Responsible Entity will be able to fund number of factors including the timing of Where the Fund acquires less than 100%
the exit of Investors at a Liquidity Event any sale, the price at which a Property is of a Property or acquires an investment
or Limited Withdrawal Offer (refer sold, the size of the Fund at the time of the in a fund, there is a risk that in connection
to section 4.3) or any other liquidity relevant sale and the Investor’s individual with the disposal of that interest potential
initiatives. There is a risk that the Fund tax position. purchasers may apply a discount as a
may not have sufficient liquid assets result of not being able to control the
to offer any liquidity opportunities to Gearing
relevant property assets. Also, the relevant
Investors in the future. If it is necessary The Fund is a geared investment investment terms may include pre-emptive
for the Fund to dispose of assets to product. Gearing will magnify the effect rights and other restrictions which may
fund redemptions, there is a risk that of any movements in the value of the impede the sale process. The Responsible
the Fund may not be able to realise Property Portfolio. Entity will take these matters into account
sufficient assets in a timely manner or when concluding the suitability of an
at an optimal sale price. This may affect A breach of a debt facility covenant may
investment.
the Responsible Entity’s ability to return also result in a debt financier enforcing
capital to Investors and may reduce the its security over the relevant assets of Conflicts of interest
NTA per Unit. the Fund. The financier may require The Fund may be affected by certain
repayment of the facility, possibly prior inherent conflicts of interest. There is
Further, it may be that all liquidity rights to its expected expiry. This could result in a risk that these conflicts may not be
may be cancelled, deferred, scaled back an early sale of a Property at a less than managed appropriately. For details on
or suspended (refer to section 4.3) and optimal sale price (e.g. in a depressed the procedure to be followed when the
following a Liquidity Event, there is no market) additional equity being required, Responsible Entity is making decisions
guarantee that the Responsible Entity or distributions being reduced or regarding the acquisition of assets from,
will be able to fund the redemption or suspended to repay the borrowings. or other dealings with, a related party,
purchase of all redeeming Investors’
If the borrowings are refinanced, the refer to section 10.2.
Units. As such, Investors may remain
invested in the Fund. terms (including fees and the interest
rate margin payable) may be less
There is also a risk that the amount favourable than those applying to the
requested to be redeemed at a Liquidity prevailing borrowings.
Event could cause the Responsible
Entity to determine that the Fund should
19
be wound up.5.4 General investment risks Counterparties
These risks relate to the overall risk of The Fund may enter into legal
most investments: agreements in relation to numerous
aspects of the Fund’s operations,
Economy and market conditions for example, property management
There is the risk that changes in the arrangements, custody arrangements,
economy and market conditions may debt financing arrangements, property
affect asset returns and values, which in development arrangements and tenancy
turn, result in reduced distributions and arrangements. The Fund may be
may decrease the NTA per Unit. adversely affected where a party fails to
perform under these arrangements.
The overall investment performance of
the Fund may be affected by changing Litigation
economic or market conditions. These
In the ordinary course of operations,
may include movements in interest
the Fund may be involved in disputes
rates, exchange rates, securities
and possible litigation. It is possible that
markets, inflation, consumer spending,
a material or costly dispute or litigation
employment and the performance
could affect the value of the assets or
of individual local, state, national and
expected income of the Fund.
international economies.
Legal and regulatory matters
Pandemics
There is the risk that changes in any
While the impact of COVID-19 or
law, regulation or government policy
any future pandemic is not able to
(e.g. in relation to aluminium composite
be forecast, there is a risk that the
panelling) affecting the Fund’s
broad economic conditions caused by
operations (which may or may not have
pandemics may adversely affect the
a retrospective effect) will have an effect
Fund, including the value of the Property
on the Property Portfolio and/or the
Portfolio and the Fund’s earnings and
Fund’s performance.
income distributions.
Taxation
Insurance
Changes to taxation law and policy
Any losses incurred due to uninsured
might adversely impact the Fund and
risks or breaches of insurance policy
Investors’ returns. Investors are advised
conditions may adversely affect the
to seek professional taxation advice in
performance of the Fund. Increases in
relation to their own position; however, it
insurance premiums may also affect
is not possible to predict future changes
the performance of the Fund. Insurance
to taxation law or policy.
premium increases could occur, for
example, due to external market
factors, or if the Fund claims under any
insurance policy for significant losses
in respect of the Property Portfolio. Any
failure by the company or companies
providing insurance (or any reinsurance)
may adversely affect the Fund’s ability to
make claims under its insurance. Also,
most insurance policies have a minimum
excess.
There are also certain events for which
insurance cover is not available or for
which the Fund does not have cover.
If the Fund is affected by an event for
which it has no insurance cover, this
would result in a loss of capital and
a reduction to the NTA per Unit and
overall Investor returns. An event of this
type could also result in an increase in
insurance premiums.
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