This article is from the Australian Property Journal archive
THE Challenger Howard Mortgage Fund has called for a unitholders meeting next month to consider a number of changes including unfreezing $850 million of funds.
Established in 1985, the $2.3 billion fund is one of the oldest and largest mortgage funds and invests in a diversified portfolio of primarily commercial mortgage loans and interest bearing securities.
However in 2008, Challenger froze redemptions after the federal government introduced the bank deposit guarantee, which caused a mass exodus of investors.
Unitholders will be asked to approve a proposal to facilitate a Special Withdrawal Opportunity which will allow the fund to make available at least $850 million which is approximately 39% of the fund’s net assets.
In this offer, Challenger will provide the option for investors with balances of $10,000 or less to receive a full withdrawal.
Challenger also plans a special one-off withdrawal offer of $700 million.
“Unitholders will be asked to approve an extension to the redemption period allowed under the fund’s constitution. If approved, it will allow us to accept withdrawal requests throughout a quarter and pay the proceeds soon after the end of the quarter instead of the current restrictive and cumbersome withdrawal offer requirements of the Fund operating as an “illiquid” scheme in accordance with the Corporations Act,” Challenger’s funds management joint chief executive Rob Adams said.
“The update also details the basis on which we expect returns of the fund to substantially improve in the quarter ending March 2011. We expect that the fund’s returns to be in the range of 5.00% to 5.50% p.a. in that quarter compared to the fund’s current yield of approximately 3.00% p.a.” he concluded.
Australian Property Journal
