Charter Hall Long WALE swallows more fish in Perth, Sydney
Charter Hall Long WALE REIT has stepped up its pace on the transaction trail, with investments into office and industrial assets in Sydney and Perth worth a combined $117.8 million.
The ASX-listed real estate investment trust, part of the stable of funds run by listed fund manager Charter Hall, will back its buying with a $60 million placement underwritten by UBS.
The two deals are the latest in a series of investments by the Charter Hall fund after it collected a $135 million cash kitty from its sell down of a half stake in Adelaide’s ATO building.
Earlier this month the property trust, headed by Avi Anger, directed a $50 million co-investment into a tower opposite the new Queens Wharf casino and entertainment precinct in Brisbane.
Along with the $60 million institutional placement, at an issue price of $4.04, the Long WALE fund will also launch a security purchase plan to generate another $20 million in funds.
That deal represents a yield of 6.6 per cent. The property is leased to the federal government with a lease term of 20 years remaining.
In Perth, the Charter Hall-run fund has taken a half stake in the Optima Centre for $62.6 million, representing a yield of 7.1 per cent.
A second Charter Hall vehicle, the Direct PFA Fund, will take over the remaining half of the Optima Centre property in a joint venture acquisition from the owner BlackRock.
The property consists of two A-grade office buildings close to the Perth CBD and major transport links.
The property’s major tenant is the Western Australian state government. The lease term has 13.7 years remaining.
The two purchases align closely to the fund’s clearest mandate: to hold assets with a long-term weighted average lease expiry, known as WALE in the commercial property sector.
Some 89 per cent of the income from the latest acquisitions will come from government tenants. The properties include average annual fixed rent reviews of 3.3 per cent.
Taking into account the latest acquisitions and the capital raising, the Charter Hall fund is now guiding towards the upper end of its previously announced range for the 2019 financial year for an operating earnings per share of between 26.4¢ and 26.6¢ per security.
In December last year, the property trust took over Virgin Australia’s headquarters in Brisbane in a $90.8 million deal with its parent platform, Charter Hall.
In July this year, the long WALE fund combined with an unlisted Charter Hall fund to acquire an office building on central Brisbane’s Tank Street for $93 million from an Ariadne joint venture.
