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Charter Hall Retail REIT (ASX:CQR) (CQR or the REIT) today announced that it has executed further on its re-positioning strategy, executing a contract to divest Gladstone Square for $31.5 million (100% interest). The asset was sold at book value, reflecting a yield of 7.25%.
The REIT further advises that it is pleased to declare a distribution of 14.0 cents per unit for the half year ending 30 June 2017. Total distributions for FY17 are 28.1cpu, which is in line with FY17 guidance for operating earnings expected to be 30.4 cents per unit and a distribution payout ratio range expected to remain between 90% and 95% of operating earnings.
Scott Dundas, Fund Manager of the REIT said:
“The divestment of this non-core property is consistent with our strategy to reduce exposure to freestanding and smaller neighbourhood assets in order to support the acquisition of larger, higher growth assets and value accretive development. This financial year we have divested five non-core properties for more than $100 million and with strong demand for retail assets we will continue to explore additional divestment opportunities. With the recent divestments at or above book value and the high quality investments into Highfields Village Shopping Centre, Salamander Bay Square Shopping Centre, and Arana Hills Plaza, we are delivering on our strategy to enhance the quality of the CQR portfolio through strategic acquisitions, divestments and redevelopments in the year ahead".
The transactions are consistent with the REIT’s strategy to transition the portfolio from smaller non- core assets towards larger convenience based supermarket anchored shopping centres with strong demographic profiles where it can add value through active management.
It is anticipated that debt facilities used to fund recent acquisitions will be repaid through this and other future divestments.