Charter Hall Long WALE REIT investment partnership enhances debt platform with inaugural USPP

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Charter Hall Long WALE REIT (ASX:CLW) (CLW or the REIT) today announced that the Long WALE Investment Partnership (LWIP or the Partnership), in which the REIT owns a 45% interest alongside Hostplus and Charter Hall Group, has priced an A$200 million US Private Placement (USPP).

LWIP owns a 100% interest in 54 hotel assets across Australia, leased to ALH Group for 17.5 years (as at 31 March 2017) on a triple net basis.

The transaction is the Partnership’s inaugural USPP issuance, comprising a 10 year A$200 million note priced at an all-in cost of debt of 5.00%, and provides LWIP and CLW with long term, through-cycle debt funding security. The issuance is due to settle on 11 May 2017 with proceeds utilised to retire existing LWIP bank debt.

Following the USPP, CLW’s FY17 operating earnings and distribution guidance is unchanged. In relation to the forecast 1H FY18 period, the USPP is anticipated to be 0.3% dilutive due to the slightly higher interest expense. Notwithstanding this, 1H FY18 operating earnings are expected to remain above PDS forecasts, as a result of the REIT’s successful acquisition of the 15 year WALE SUEZ portfolio. The issuance is also expected to be NTA neutral.

Following the issuance, the REIT’s current look through debt metrics as at 31 March 2017 are as follows:

Weighted average cost of debt of 4.0%;
Weighted average debt maturity is 5.3 years (up from 4.1 years);
Weighted average hedge maturity of 6.0 years (up from 4.3 years); and
Look through debt is 66% hedged or fixed.

CLW Fund Manager, Avi Anger commented:

“The REIT continues to focus on actively managing the portfolio, acquiring assets with long leases to high quality tenants and implementing prudent capital management initiatives which will create value and deliver sustainable and growing returns for investors. The REIT also achieved a significant milestone with its recent inclusion in the S&P/ASX 300 Index".