Investment strategy
CDI offers investors exposure to a diversified portfolio of quality, well located properties with stable income returns and potential for capital growth. CDI's investment strategy aims to enhance earnings and capital growth prospects by:
- maximising property performance through pro-active 'hands-on' asset management, development management, property management and leasing;
- utilising Challenger Group's property, treasury, legal, tax, and back office expertise;
- attracting and retaining high quality real estate professionals;
- repositioning and/or developing assets; and
- strengthening the portfolio via the acquisition and divestment of properties to generate net tangible asset (NTA) and/or earnings per Unit (EPU) accretive returns.
Core and value-add portfolio strategy
CDI's portfolio consists of 'core' (96% as at 31 December 2009) and 'value-add' properties. The core properties are quality assets which are intended to be long-term investments by CDI. The value-add properties are assets which, through repositioning and/or development, can enhance earnings and capital growth prospects.
CDI's core and value-add portfolio strategy is illustrated in the diagram below.
Investment policy
The Investment Policy for CDI is designed with the objective to enhance unitholder returns without adversely changing the risk profile of CDI. The main elements of this policy are:
- To acquire interests in properties which:
- generate a sustainable income return;
- generate NTA and/or EPU accretive returns;
- are predominantly income producing assets in the office, industrial or retail property sectors; and
- individually do not include any single asset representing more than 20% of the total portfolio value post acquisition.
- Properties are to be acquired at no more than fair value as determined by an independent qualified property valuer.
- All acquisitions shall be subject to due diligence on the properties, consistent with prudent market practice, in particular, to confirm that the property has:
- no material compliance or statutory problems;
- no material unmitigated environmental problems;
- no material issues related to title or survey; and
- no material legal impediments which may prevent ownership being transferred.
- To undertake refurbishment or development of properties, which may include risk mitigation strategies such as joint ventures, pre-commitments from tenants, fixed price and/or fixed time construction contracts or other measures.