Steven Bennett, Charter Hall; Dug Higgins, Zenith. Photo: Matt Fatches
Category: Direct property
Winner: Charter Hall Group
Analyst: Dug Higgins
Sector overview:
Direct property markets continue to benefit from strong capital inflows driven by historically cheap debt and yield spreads remaining elevated. Despite this, broad real estate fundamentals remain challenged in many areas. As always, those with strong investment discipline, robust portfolios and appropriate capital structures will be rewarded, particularly when the cycle turns. Managers with strong active management skills matched with astute asset selection continue to perform well, generating solid, low-volatility returns for which this asset class is favoured.
Zenith says…
Charter Hall benefits from the significant expertise and resources of the wider Group. The business operates an internalised model, keeping property management as well as asset management in-house. When executed well, Zenith favours such models strongly as this typically allows for a closer relationship with tenants and creates strong synergies in asset management. Charter Hall’s extensive real estate expertise is combined with conservative and robust risk management practices, which work in tandem with its deep real estate skill set.
Interview
Steven Bennett
Fund manager
Charter Hall Group
Charter Hall applies an institutional management approach to direct property funds. We’re institutional in our focus, and we have a diverse team to rely on, with more than 400 property professionals located throughout key markets in Australia. We’ve been disciplined. We made a conscious effort to only acquire quality properties, with that income focus for our investors. We want to make sure we continue to outperform our benchmark and deliver strong returns to them. We’ve leveraged the Charter Hall acquisition capability and we’ve bought four very high quality assets since the fund reopened to investment, which increased the lease term to more than nine years. The fund has 100 per cent occupancy and more than $840 million of assets. The acquisitions have really underwritten the performance of the vehicle. We get the benefit of seeing many acquisitions in the market and we did expect some of the growth that’s coming through, so we deliberately positioned the assets of the fund to be weighted towards Sydney and Melbourne – we have a 70 per cent weighting to those two markets – and that’s been a great decision for the fund. We weren’t expecting so much demand for the product and we’ve refreshed the PDS and relaunched the product to the market.
