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Charter Hall Long WALE REIT (ASX: CLW) (the REIT) today announced its results for the period from IPO to 31 December 2016.
Avi Anger, Charter Hall Long WALE REIT Fund Manager, commented:
“This result demonstrates our ability to actively grow the Long WALE REIT with the strategic acquisition of the SUEZ portfolio and a $9 million increase in revaluations across our retail properties, which has enhanced returns to securityholders. We have delivered operating EPU of 3.44 cents, slightly above PDS forecasts. Valuation gains have also lifted the NTA per unit to $3.88. This result reflects the REIT’s strategy of providing investors with stable and secure income with potential for both income and capital growth, via an exposure to a high quality portfolio of long WALE properties.”
Accretive Portfolio Acquisition and Positive Revaluations
Gross assets have increased by $75 million or 6% to $1.33 billion for the period from listing to 31 December 2016, as a result of $65.9 million of acquisitions and $9 million of revaluations. The REIT’s diversified portfolio comprises 76 properties with a WALE of 12.2 years (at 31 December 2016) leased to high quality tenants.
The newly acquired SUEZ portfolio consisted of 10 properties with a portfolio WALE of 15.0 years and a portfolio capitalisation rate of 6.0%. The portfolio leases are structured as triple net with 3% annual rental increases providing the REIT with exposure to a resilient rental income stream, generated from a high calibre tenant that has a leading position in the waste recycling sector.
Mr Anger added:
“The acquisition further strengthens the portfolio, is earnings and average rent review accretive and increases the portfolio WALE at 31 December 2016 to 12.2 years, the longest WALE for an ASX listed diversified REIT".
Following a review of CLW's portfolio, it was determined that 33 retail assets representing 16% of the REIT’s portfolio would be independently revalued at December 2016, whilst the remaining 21 retail assets were subject to Directors’ valuations. The valuations resulted in a $9.0 million or 4.4 cpu increase in asset valuations, which represents 3.0% growth to $314 million for CLW’s share of the LWIP portfolio.
The valuation uplift was largely attributable to structured rental growth across the assets, with minor capitalisation rate compression recorded for the properties that were independently valued. Post the revaluations and the SUEZ portfolio acquisition, the portfolio’s weighted average capitalisation rate (WACR) tightened by 6bps to 6.31%.
Resilient balance sheet
During the period, the REIT completed a number of capital management initiatives, which have expanded its existing debt platform and increased its overall hedging position. These initiatives include:
Post 31 December 2016, the following further capital management initiatives have occurred:
Strategy and Outlook
The REIT continues to focus on actively managing the portfolio and acquiring assets with long leases to high quality tenants with leading market positions to create value and deliver sustainable and growing returns for investors.
Absent unexpected events, our upgraded FY17 guidance is operating EPU of 16.2 cents, up 1.2% on the listing PDS forecast. The target distribution payout ratio remains at 100% of operating EPU.