Charter Hall Retail REIT September 2013 Quarterly Update
Charter Hall Retail REIT (ASX:CQR) (the REIT) today announced an update for the quarter ending 30 September 2013.
Across its Australian portfolio, the REIT completed 49 new leases and renewals, delivering specialty rent growth of 2.8% during the quarter. This excludes a further 23 non comparable deals in new developments where no lease history existed. Occupancy was maintained at 98.2%, with the anchor tenant weighted average lease expiry (WALE) increasing from 10.7 years at 30 June 2013 to 10.9 years at 30 September 2013.
Anchor tenant MAT growth for stores in turnover was 3.5% at 30 September 2013, with 51% of anchor tenants paying turnover rent, highlighting the resilience of the REIT's non-discretionary Australian portfolio. Specialty shop sales grew at 1.5%, consistent with reported growth at 30 June 2013.
Transactions and capital management
Since June 2013, the REIT completed the sale of its Polish portfolio at a price of €174.5 million and sold a small asset in the United States, located at Powers Ferry Crossing in Atlanta Georgia, for US$3.6 million. These sales were in line with or above June 2013 book values with the realised total net proceeds of $64 million being immediately redeployed to acquire the Southgate Plaza Shopping Centre, in Morphett Vale South Australia, for $60 million. The contract for the acquisition of Southgate Plaza was unconditionally exchanged on the same day as the Polish deal was formally settled. The Southgate Plaza transaction settles today.
The REIT also completed the acquisition of the Secret Harbour shopping centre and adjoining development land, located 50 kilometres south of Perth in Western Australia, for $33.2 million reflecting an initial yield on the shopping centre component of 7.8%. Planning is underway to expand the existing centre from 5,600 square metres to 15,700 square metres, incorporating at least one additional anchor tenant. The acquisition of Southgate Plaza and Secret Harbour shopping centre take the REIT’s total Australian supermarket anchored portfolio to 76 assets.
In August the REIT refinanced its multi-currency debt facility with a new syndicated debt facility and extended the term to August 2018. This refinance also increased the facility limit to $425 million, reduced the margin and introduced a new banking partner to facilitate future growth for the REIT.
The REIT has completed two Australian redevelopments since 30 June 2013 – the $62 million redevelopment of Singleton Square in NSW and the $15 million redevelopment of South Hedland Square in Western Australia. Both centres are trading strongly, with current occupancy of 95.6% and 99% respectively.
During the quarter the REIT’s Board approved a redevelopment at Caboolture, Queensland. This redevelopment involves the installation of a new travelator, full mall refurbishment and two new anchor lease deals. It is forecast to cost $15.9 million and deliver a year one yield of 10.2%. Construction is expected to commence in November 2013. The REIT also completed the redevelopment of its Chemnitz property in Germany with the German portfolio to be marketed for sale in late FY14.
Scott Dundas, Fund Manager, said: “We are pleased to have continued to deliver on our strategy of strengthening our Australian portfolio through both acquisitions and redevelopments. We continue to see positive buying opportunities across the Australian market at this time as well as redevelopment opportunities within our existing portfolio, which is a profitable and efficient way of deploying capital and enhancing returns from the existing portfolio.”Commenting on the Australian portfolio performance, Mr Dundas added: “The Australian portfolio performance is in line with our expectations and reflects the continued strength of the non-discretionary retail market generally, and the REIT’s portfolio in particular.”
About Charter Hall Retail REIT
Charter Hall Retail REIT is a leading listed real estate investment trust with a portfolio of predominantly high quality Australian supermarket anchored neighbourhood and sub-regional shopping centres.
Charter Hall Retail REIT is managed by Charter Hall Group (ASX:CHC), one of Australia’s leading fully integrated property groups, with over 22 years’ experience managing high quality property on behalf of institutional, wholesale and retail clients. Charter Hall has over $10 billion of funds under management across the office, retail and industrial sectors. The Group has offices in Sydney, Melbourne, Brisbane, Adelaide and Perth.
The Group’s success is underpinned by a highly skilled and motivated team with diverse expertise across property sectors and risk-return profiles. Sustainability is a key element of its business approach and by ensuring its actions are commercially sound and make a difference to its people, customers and the environment, Charter Hall can make a positive impact for its investors, the community and the Group. For further information on Charter Hall Group and Charter Hall Retail REIT go to www.charterhall.com.au
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