New office trust to provide ‘tax-advantaged’ income and yields of 9% to investors and SMSFs

A new office trust has been launched by Charter Hall giving high-net-worth investors and self-managed super funds (SMSFs) the opportunity to invest in a tax-advantageous A-grade Perth CBD office building, with yields of 9% promised.

The trust, known as the Charter Hall Direct 144 Stirling Street Trust, is made up of a single asset, the Hatch Building at 144 Stirling Street on the northern fringe of the Perth CBD.

The property is a recently constructed 11,0000-square-metre A-grade office building on a corner site with four street frontages and parking for 250 cars.

Engineering and consulting group Hatch is the key tenant and recently reviewed its lease for a further 10 years.

The trust aims to provide investors with sustainable and stable, tax-advantaged income and the potential for capital growth through investment in the Hatch building.

Charter Hall Direct is forecasting a first year income yield of 8.85%, growing to over 9% during the life of the Trust.

According to trust manager Charter Hall Direct Property, the unlisted property funds arm of the ASX-listed Charter Hall group, the trust has been launched in response to growing demand for investment opportunities in the Perth CBD.

Head of Charter Hall Direct Property Richard Stacker says advisers and investors are looking for alternative investments that have a return profile that is less correlated to equity markets and other asset classes.

“The growing spread between term deposits and direct property, which currently sit at around 3% to 4% after the recent lowering of interest rates, means SMSFs are very attracted to the yields on offer in direct property.”

Stacker says investors are looking to commercial property to enhance their overall portfolio returns.

"We are currently in one of the best buying cycles since the mid-1990s and investors who understand or are being advised by people who understand property cycles are taking full advantage of this.

"Investors need to be selective on the markets and property sectors they invest in. For example, in the resource based states commercial property markets are expected to outperform given the current climate and strong employment growth prospects.

“The new trust is one opportunity for retail investors and SMSFs to benefit from the resources boom, employment growth in Western Australia and what we expect will be strong continued demand for high quality office space over the medium term," he says.

Stacker says 80% of Charter Hall Direct Property's equity flows are coming from SMSF investors and it is a segment he expects to see more growth from over the coming years.

Minimum investment in the trust is $50,000.

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