Charter Hall, one of Australia’s largest property managers and the firm which withdrew from serious discussions to buy Westpac’s Hastings infrastructure business in August, has launched a thematic property fund. It’s a new form of diversification.
David Harrison, managing director and chief executive, said at a Sydney media briefing last week, that the firm would be interested in pursuing other infrastructure firms, but was unlikely to build its own capability.
He said that Charter Hall’s portfolio of funds, underpinned by property leases, provided similar investment characteristics to that of infrastructure. He said the unlisted funds, which typically had a five-seven-year lock-up, were particularly good for retirees and SMSF trustees – providing an additional illiquidity premium.
Charter Hall announced an exclusive due diligence arrangement with Westpac over Hastings in July this year but pulled out a month later. Harrison has declined to provide detailed reasons for the withdrawal.
He was present last week at the launch of a new Charter Hall property fund which is of a thematic nature, concentrating on consumer staples, such as big food stores. While there are demographic shifts in the way people are spending money on food and other staples, they are likely to continue to do so indefinitely.
According to analyst Craig Woolford, the head of Citi Research, who also presented at the briefing, people are moving away from the “big trolley” weekly shops to the more frequent “basket shops”. But they are not buying less.
Notwithstanding the inroads being made by internet sales, and the impending encroachment of Amazon in Australia, both non-food and food retail sales remain healthy. Department store sales, however, are struggling.
In the online grocery stakes, Woolworths and Coles are expected to continue to dominate. Woolford said that Australia’s online grocery sales was broadly consistent with its population density, with penetration coming in at about 2.4 per cent, compared with South Korea’s 10 per cent, Japan’s 7.2 per cent and UK’s 6.9 per cent.
The Charter Hall Dire3ct Diversified Consumer Staples Fund kicks off with a range of Bunnings hardware stores, Coles Express outlets and JBS and Primo shops.
Charter Hall says: “Consumer staples entities are resilient because they are not as exposed to economic cycles as other tenants. Ultimately, having resilient tenants provides greater income security to [the fund’s]investors.”