Charter Hall acquires $780 million 9 year WALE investment portfolio

Charter Hall is pleased to announce that it has secured a $780 million investment portfolio to be owned by Charter Hall Direct funds together with the Charter Hall Long WALE REIT (ASX:CLW). The high quality first generation leased portfolio comprise 3 office and one life science/industrial assets.

The Portfolio comprises four assets with a total NLA of 69,503sqm:

• the Services Australia building in Tuggeranong, ACT for $306 million;
• the Australian Taxation Office (ATO) building in Box Hill, VIC for $230 million;
• the Australian Red Cross Building in Alexandria, NSW for $159 million; and
• the ATO Building in Albury, NSW for $85 million.

The Portfolio is characterised by long leases to Commonwealth government or government supported tenant customers with an average WALE of 9.1 years, which benefit from fixed rental increases of between 3.5% and 4.0% per annum (3.6% weighted average rental increase).

The Portfolio will be acquired in joint venture between CLW, who will own 50% of each asset, and the Charter Hall Direct Office Fund (Tuggeranong and Box Hill), the Charter Hall Direct PFA Fund (Albury) and the Charter Hall Direct Industrial Fund No.4 (Alexandria).

This acquisition grows the Charter Hall platforms office portfolio to beyond $23 billion which is secured by a 30% exposure to government/government related tenants.

Charter Hall’s Managing Director and Group CEO, David Harrison, said “We continue to deliver on the long WALE and government lease thematic that Charter Hall has pursued for many years which, in the current environment of low interest rates and the focus on secure and growing income streams, provides attractive risk adjusted returns to both our listed and unlisted fund investors.”

“We are also very pleased to secure another asset in the Social Infrastructure sector leased to such an essential service provider as the Australian Red Cross” said Mr Harrison.

Mr Harrison commented that it brings Charter Hall’s total acquisitions in FY21 across the office, retail, industrial & logistics and social infrastructure sectors to approximately $7.0 billion.

Charter Hall’s Direct CEO, Steven Bennett, said “the 50% share of the Portfolio acquisition by Charter Hall’s Direct funds lifts the Direct business to approximately $7.5 billion in scale pre any 30 June revaluations that will come through.

“The opportunity for three of the open for investment Direct funds being able to acquire these assets showcases the diversity of the opportunities the Charter Hall Group provides to its Direct investors and the institutional quality of the assets held by these funds which boast an average WALE of between 7.6 and 11.8 years. All these funds have in excess of 96% occupancy and are leased to high quality tenant customers” said Mr Bennett.

Colliers led by James Barber sourced the transaction off-market on behalf of Charter Hall.