Avi Anger, Charter Hall Long WALE REIT Fund Manager commented: “CLW has successfully completed its $50 million on market security buy-back program. The portfolio is in an excellent position with 53% of leases in the portfolio being triple-net, occupancy of 99.8% and a weighted average lease expiry of 9.7 years. Like for like property income growth of 3.5% resulted from an attractive mix of fixed and CPI linked annual increases”.

Portfolio update:

During the half year period, a total of $300.4 million in asset divestments were completed with $11.5 million of new acquisitions. The acquisitions were strategic in nature, consolidating adjoining sites to existing assets owned in CLW’s convenience retail hospitality portfolio.

Divestments (previously announced and now completed during the half year period):

• $225.3 million of Agri-Logistics assets with the sale of the Inghams portfolio;
• $74.0 million (CLW’s 50% share) of Australian Red Cross, Sydney, NSW; and
• $1.1 million (CLW’s 24.5% share) bp Australia Armadale Service Centre, WA.

Acquisitions:

Strategic acquisition of the accommodation that adjoins CLW’s existing investment in the Narrabeen Sands Hotel (CLW 50% ownership). The asset, which is located in northern Sydney is leased to the Endeavour Group with a 9.3 year lease term; and

BWS Crows Nest (CLW 50% ownership), leased to Endeavour Group with a new 10 year lease term. This asset adjoins the REIT’s existing Crows Nest Hotel investment located in a rapidly densifying area of inner northern Sydney.

• Major Lease Expansion:

CLW and its joint venture partners have agreed with Coles to expand its Western Australian Distribution Centre at Perth Airport, in conjunction with a reset 12 year lease. The expansion future-proofs the property and demonstrates the active and collaborative approach of CLW to achieve mutually beneficial outcomes for investors and tenant customers.

At the end of the period, the REIT’s $5.5 billion diversified portfolio is 99.8% occupied with a long WALE of 9.7 years.

Key financial and operational highlights for the period are:

Financial and portfolio highlights:

• Operating earnings of $89.8 million, or 12.5 cents per security (cps)
• Distributions of 12.5 cps
• Net tangible assets (NTA) of $4.62 per security
• Statutory earnings of $51.3 million
• 3.5% like-for-like Net Property Income (NPI) growth
• Portfolio weighted average lease expiry (WALE) of 9.7 years
• Portfolio occupancy of 99.8%

Operational Highlights:

• Overall portfolio valuation remains broadly unchanged from prior book value
• Completed $50 million on market security buy-back program
• Completed a total $289 million of net property divestments including:
• divested $300.4 million of assets including divestments previously announced as part of the REIT’s strategic asset sale program; and
• acquired two Endeavour Group leased, long WALE, hospitality assets for a total $11.5 million.
• Executed agreements with Coles for an expansion and lease extension at its Perth Airport Distribution Centre, WA

Portfolio Valuations:

CLW had 82% of the portfolio independently valued with the portfolio valuation predominantly flat over the six month period after adjusting for divestments and the valuation impact of the upcoming lease expiry at the Telstra Canberra Head Office. The net valuation movement at the end of the period was $15 million or a 0.3% reduction. This reflects stabilisation of asset values over the period with the portfolio weighted average capitalisation rate remaining unchanged at 5.4%.

Capital Position:

With the completion of the asset divestment program, CLW has balance sheet gearing of 31.8%, within the target range of 25% – 35% and look through gearing of 39.0%.

During the period, $310 million of balance sheet debt was refinanced and extended by 2.8 years. As at 31 December 2024 the REIT has a weighted average debt maturity of 4.0 years with staggered maturities over a six-year period from FY27 to FY32. CLW’s look-through drawn debt is 64% hedged with a weighted average hedge maturity of 1.6 years. CLW has $266 million of cash and undrawn debt.

In December 2024, Moody’s reaffirmed CLW’s Baa1 investment grade rating.

More Charter Hall Long WALE REIT reading:

Charter Hall Long WALE REIT FY24 Results | Commo.

Charter Hall Long WALE REIT (ASX CLW) | Charter Hall