Ludovic Theau from Australian Ethical speaks to Laurence Parker-Brown from The Inside Network on what has changed across this investment theme in the last few years. The Inside Adviser
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Charter Hall remains acquisitive amid Victorian tax shake-up
Charter Hall Long WALE REIT (ASX: CLW) has announced that it has secured a $790 million investment portfolio to be owned by the REIT and Charter Hall Direct funds.
The high-quality first-generation leased portfolio comprises three offices and one life science/industrial asset. The portfolio comprises four assets with a total net lettable area (NLA) of 69,503 square metres:
- the Services Australia building in Tuggeranong, ACT, for $306 million;
- the Australian Taxation Office (ATO) building in Box Hill, Victoria, for $230 million;
- the Australian Red Cross Building in Alexandria, New South Wales, for $159 million; and
- the ATO Building in Albury, New South Wales, for $85 million.
Importantly, the portfolio is underpinned by long leases to Commonwealth government (or government-supported) tenant customers with an average WALE of 9.1 years. These have fixed rental increases of between 3.5% and 4.0% a year (3.6% weighted average rental increase).
“The portfolio will be acquired in joint venture between CLW or Charter Hall’s Long WALE REIT, who will own 50% of each asset, and the Charter Hall Direct Office Fund (Tuggeranong and Box Hill), the Charter Hall Direct PFA Fund (Albury) and the Charter Hall Direct Industrial Fund No.4 (Alexandria). This acquisition grows the Charter Hall platforms’ office portfolio to beyond $23 billion which is secured by a 30% exposure to government/government related tenants.”
Charter Hall’s managing director and group CEO, David Harrison, said: “We continue to deliver on the long WALE and government-lease thematic that Charter Hall has pursued for many years, which, in the current environment of low interest rates and the focus on secure and growing income streams, provides attractive risk-adjusted returns to both our listed and unlisted fund investors. We are also very pleased to secure another asset in the social infrastructure sector, leased to such an essential service provider as the Australian Red Cross.”
Including this acquisition, Charter Hall’s total value of acquisitions in FY21 across the office, retail, industrial & logistics, and social infrastructure sectors now sits at about $7 billion.
