An Update on the Charter Hall Direct Office Fund 2020

By Paul Nicol

Before the onset of COVID-19 in Australia, our Senior Partner and Financial Planner, Patrick Malcolm, interviewed the Direct CEO of Charter Hall, Steven Bennett, to discuss investing in unlisted office property and to get an update on the Charter Hall Direct Office Fund.

The Charter Hall Direct Office Fund is an unlisted property fund investing in a diverse portfolio of high-quality Australian Office properties. Charter Hall actively manages, develops, and acquires assets to create one of the highest performing office property portfolios in Australia. The Fund currently comprises 14 properties, predominantly in the CBDs in the East of Australia.

The Fund’s portfolio was independently valued at 31 March 2020. The portfolio decreased by 0.4%. The portfolio will be valued again on 30 June 2020. The Fund’s portfolio is 97% occupied with a long 8.2 year Weighted Average Lease Expiry (WALE).

Over the quarter, the Fund also successfully refinanced its $1.0bn debt facility, extending the average term to maturity out to 4.5 years and negotiating a reduced debt margin. This resulted in the Fund reducing the overall interest cost for the benefit of investors.

The Fund’s top 10 tenants represent 69% of the portfolio and have strong covenants. This provides strong income protection for investors.

We can’t yet speculate on the damage that the broad-based shutting down of the economy will have on the employment market. The good thing about such a long term WALE is that Charter Hall won’t have to do any material leasing in the short term.

In the recording, Steven details his views on the defining characteristics of unlisted property as an asset class, what Charter Hall look for when acquiring new assets, talks about a couple of the properties within the Fund and the supply of office property in Sydney and Melbourne.

We hope you enjoy the recording.