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Charter Hall WALE Limited as responsible entity of the Charter Hall Long WALE REIT (ASX:CLW) (CLW or the REIT) today announces that it:
Overview of the Acquisitions
The REIT has entered into agreements to acquire the following:
In addition, the REIT has completed the acquisition of a 49.9% interest in an Endeavour Group leased pub the Parap Tavern in Darwin, NT for $9.8 million2.
(together, the Acquisitions)
The total property value of the Acquisitions is $319 million, reflecting a weighted average capitalisation rate of 4.58%. The Acquisitions feature a long WALE of 10.4 years and 91% of income is derived from triple net leases (NNN).
Avi Anger, Fund Manager of CLW said:
“The Acquisitions are high quality, well located and strategic long WALE properties. 76-78 Pitt Street, located in the centre of the Sydney CBD, has been acquired via a sale and leaseback with Telstra Corporation Limited on a long, 10 year triple net lease with fixed annual 2.5% rent increases. The property has a high underlying land value and future optionality.”
“Bunnings Caboolture and the Parap Tavern are located in strong trading areas and identified growth corridors for Bunnings and Endeavour Group. The Acquisitions increase the proportion of triple net leases in the portfolio from 50% to 53% and increase the proportion of fixed rent reviews to 55%, further supporting the REITs secure and growing income. The Acquisitions also increase CLW’s exposure to high quality tenants in Telstra, Endeavour Group and Bunnings.”
|Number of properties||456||3||459|
|Weighted average capitalisation rate||5.24%||4.58%||5.19%|
|WALE||14.5 years||10.4 years||14.2 years|
|Proportion of NNN leases||50%||91%||53%|
To partially fund the Acquisitions and associated transaction costs, the REIT will undertake a fully underwritten institutional placement to raise $250 million. The Placement is fully underwritten by J.P. Morgan Securities Australia Limited, Morgan Stanley Australia Securities Limited and UBS AG, Australia Branch.
The Placement will be issued at a fixed price of $4.65 per security, which represents a:
Securities issued under the Placement will rank equally with existing CLW securities from the date of issue and will be entitled to the distribution for the three months to 31 December 2020 of 7.3 cents per security.
The balance of the funding for the Acquisitions will be sourced from proceeds from the REIT’s upsized October 2020 Security Purchase Plan (SPP), September 2020 quarter Distribution Reinvestment Plan (DRP) and existing CLW debt capacity.
The October SPP was originally intended to raise $10 million, but in light of the strong demand, over-subscriptions were taken and $66.1 million was raised. Given this excess demand was satisfied and that securityholders cannot participate in SPPs beyond a prescribed limit over a 12 month period, there will be no SPP accompanying the Placement.
Distribution for the Quarter Ending 31 December 2020
On 7 December 2020, CLW declared a distribution of 7.3 cents per security for the period ending 31 December 2020. The DRP will also be active for this period.
Including the impact of the Acquisitions and Placement and based on information currently available (including with respect to the COVID-19 pandemic) and barring any unforeseen events, CLW is pleased to reaffirm its FY21 Operating EPS guidance of no less than 29.1 cents per security, which represents FY21 Operating EPS growth over FY20 of no less than 2.8%.
Including the impact of the Acquisitions, Placement, previously announced $150 million net valuation increase as at 31 December 2020, October 2020 SPP and September 2020 quarter DRP proceeds, the REIT's pro-forma6:
Post the Acquisitions and Placement, the REIT is well positioned with $339 million of investment capacity.
|Trading halt and announcement of the Acquisitions and Placement||Wednesday, 9 December|
|Placement bookbuild||Wednesday, 9 December|
|Bookbuild closes||Wednesday, 9 December at 5.00PM|
|Trading of securities recommences on the ASX||Thursday, 10 December|
|Settlement of new securities issued under the Placement||Monday, 14 December|
|Allotment of securities issued under the Placement||Tuesday, 15 December|
|Record date for December quarter distribution||Thursday, 31 December|
All dates and times are indicative only and subject to change. Unless otherwise specified, all times and dates refer to AEDT.
Additional information about the Acquisitions and Placement including certain key risks are contained in the investor presentation released to the ASX today. All amounts are in Australian dollars unless otherwise indicated.
Announcement Authorised by the Board
1 Total on-completion valuation
2 Acquisition made via the Charter Hall managed Long WALE Investment Partnership, in which CLW has a 49.9% interest
3 Per pro forma metrics outlined in the investor presentation released to ASX on 10 September 2020 (including the bp New Zealand portfolio which has exchanged with settlement subject to New Zealand Overseas Investment Office approval), adjusted for the REIT’s Dec-20 portfolio revaluations and the vacancy of 56 Edmondstone Road, Bowen Hills
4 CPI is assumed at 1% on average over the forecast period
5 Based on CLW’s FY21 Operating EPS guidance of no less than 29.1 cents per security (based on information currently available, including with respect to the COVID-19 pandemic, and barring any unforeseen events)
6 As at 30 June 2020, with pro forma adjustments outlined in Appendix A of the investor presentation released to the ASX on 9 December 2020
Click here to view the ASX Announcement
Click here to view the Investor Presentation