Charter Hall Direct Green Square Fund

Fund Overview

In November 2016,Charter Hall entered into a 50/50 joint venture with Furnished Property to develop a 144 room Hotel at Green Square, Sydney.

The site, at 18 O’Riordan Street, Alexandria, is located within the $13 billion, 278 hectare Green Square Urban Regeneration Area (‘GSURA’) and is strategically located approximately 100 metres from the Green Square Train Station. The Sydney Airport Domestic and International Terminals are two and three stops respectively to the south with Central Station, one stop to the north. Green Square is one of the most significant urban transformation programs under construction in Australia, revitalising the industrial edge of Sydney’s inner south into a vibrant global village. Green Square Town Centre, which is the centerpiece of the GSURA, is in close proximity to the proposed hotel.

The Charter Hall Direct Green Square Fund was launched in November 2017, to raise $23.2 million (closing over-subscribed), which together with construction finance, will fund the development of the hotel on a fund-through basis reducing CHC and Furnished Property‘s funds employed to develop the hotel. The Fund will own the hotel long-term.

Construction commenced late 2017 with the hotel forecast to open in 2019. Furnished Property has taken a 10 year lease (with 8 x 5 year options), with a minimum base rent with annual increases, and a turnover rent. Furnished Property will operate the hotel under their Veriu Hotel & Suites Brand.

Source: City of Sydney

Sector Hotel
Location 18 O’Riordan Street, Alexandria, NSW
Number of Rooms 144
Hotel Operator / Brand Veriu Hotels & Suites
Charter Hall Interest (%) 50
JV Partner Furnished Property
Construction Completed September quarter, 2019

Key Financial Information

Distributions 7.0% Forecast FY18 and FY19 Annualised Distribution
NTA on Paid Units $0.50 per Unit
Forecast Equity IRR* 12.6% pa
Property Value** $43.5m
10 Year Lease 100% Pre-Leased to Veriu Hotels & Suites

*Post-fees, pre-tax over the life of the Fund
**As of Completion Date

Our Board

Grant Hodgetts
Non-Executive Chairman
BA, Assoc Dip Val, AAPI, MAICD
Greg Paramor AO
Non-Executive Director
Ross Strang
Non-Executive Director
Adrian Harrington
Head of Capital & Product Development

Our Executives

Adrian Harrington
Head of Capital & Product Development
Ben Dodwell
Head of Diversified Development
BA (I.D.), Grad. Dip. App. Fin. SIA, DIP PROP FIN, MAICD
Travis Butcher
General Manager, Finance - Diversified
B.Acc, CA, Grad. Dip. AFI SIA
Scott Martin
Head of Finance - Diversified
B.Com, CA
Mark Stewien
Head of Legal - Diversified
LL.B, BCom (Finance)
Sean Wilson
Investment Manager, B.Bus (Real Estate Development & Valuation)

Investor Centre

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Distributions & NTA

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What is an Attribution Managed Investment Trust (AMIT)?

An AMIT is a managed investment trust that has chosen to apply the AMIT regime. Managed investment trusts include most listed trusts and other widely held trusts.

What is the AMIT regime?

The Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 (the Act), which establishes a tax system for managed investment trusts (MITs), received Royal Assent on 5 May 2016. The rules apply from 1 July 2016.

Prior to the commencement of the AMIT regime, family trusts and large managed investment trusts were subject to the same set of tax laws. Many aspects of these laws were uncertain and difficult for managed investment trusts to apply in practice and resulted in unnecessary administration costs.

The AMIT regime provides a specific set of rules that are intended to provide greater flexibility in the operation of an AMIT’s tax affairs and to reduce administration costs.

Under the AMIT Regime, unitholders are taxed on the taxable income that is “attributed” to them by a Fund on a “fair and reasonable” basis.  Under this approach a Fund can attribute an amount of taxable income to unitholders that is greater than the cash paid.

The AMIT regime will not change the overall manner in which the Fund’s income is taxed or change the way in which investors complete their tax return. Consistent with the previous trust taxation regime:

  • the Fund itself will not be subject to tax;
  • an Australian resident unitholder will include their share of the Fund’s taxable income in their assessable income for the year to which the income relates (not the year in which it is received);
  • withholding tax will be deducted from distributions to non-resident unitholders;
  • investors will include the different components of their share of the Fund’s taxable income in the tax return labels; and
  • where cash distributed to unitholders is greater than their share of the net income of the Fund, the unitholder is required to reduce their cost base in the units of the Fund.

At this stage, Folkestone Funds Management Limited intends to continue with its current distribution policy and will attribute a Fund’s taxable income in the same manner as under the previous trust taxation regime which is in proportion to the cash distributed to each unitholder.

Why is the Fund electing to opt-in to the AMIT Regime?

Folkestone Funds Management Limited has decided to elect for the AMIT Regime to apply to the Fund commencing from 1 July 2017 for the following reasons:

  • elimination of a number of areas of uncertainty in the existing laws;
  • tax status of Fund – The AMIT Regime deems the Fund to be a “fixed trust” providing certainty to the Fund to be eligible for certain tax concessions, such as the ability to recoup carried forward trust tax losses;
  • prescriptive treatment of under or over-distributions of taxable income (“overs” or “unders”) of a Fund which will reduce the requirement to amend prior year tax returns previously lodged; and
  • prevention of double taxation – The AMIT Regime provides the ability to make upward cost base adjustments to Fund units where cash distributions are less than the taxable income attributed to unitholders. In the absence of this, unitholders may be taxed twice on certain amounts attributed to them.

When does the AMIT regime start?

Managed investment trusts can choose to be AMITs with effect from the year ended 30 June 2016 or any later year.  The Fund has elected to become an AMIT from 1 July 2017. The Fund will be an AMIT for all subsequent years as the election is irrevocable.

Tax Components

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Reports & Publications

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