Charter Hall Group (ASX: CHC) (Charter Hall or the Group) is finalising preparations to list on the ASX a new real estate investment trust, Charter Hall Long WALE REIT (Long WALE REIT or the REIT).
Long WALE REIT will invest in high quality Australasian properties that are leased to corporate and government tenants on long term leases. The initial portfolio will be diversified by geography and real estate sector containing office, industrial and retail properties located in six Australian states.
The REIT will comprise an initial portfolio of 66 properties independently valued at $1,253 million with a weighted average capitalisation rate of 6.4%, a weighted average lease expiry of 12.5 years and occupancy of 100%.
Long WALE REIT will target the distribution of 100% of operating earnings and expects to provide investors with stable, recurring income through quarterly distributions. Growth in distributions is expected to be underpinned by a combination of fixed rental increases and CPI linked rental reviews. Approximately 58% of the income from the initial portfolio is subject to fixed rental increase at a weighted average annual review of 3.4%. The balance of income, approximately 42%, is subject to rental reviews linked to CPI. The weighted average rental review across the initial portfolio is estimated at 2.8%.¹
Charter Hall has established Charter Hall WALE Limited as the responsible entity of the REIT. The Board of the responsible entity will comprise five directors, with a majority of directors being independent. The Independent Chairman is Peeyush Gupta with Glenn Fraser and Ceinwen Kirk-Lennox as independent non-executive directors. Charter Hall Group Managing Director and Group CEO, David Harrison, and Charter Hall Head of Office, Adrian Taylor, are also on the Board as executive directors
Long WALE REIT’s Fund Manager will be Avi Anger, the Deputy Fund Manager will be Ben Ellis and Kerri Leech will be the REIT’s Head of Finance. The REIT will also benefit from access to Charter Hall’s broader platform and proven track record in sourcing investment opportunities, as evidenced by $12.6 billion of transactions executed over the last five years, including $9.3 billion in acquisitions and $3.3 billion in divestments.
Charter Hall’s Managing Director and Group CEO, David Harrison said: “Long WALE REIT’s objective is to provide investors with stable and secure income and the potential for both income and capital growth through an exposure to long WALE properties. We see a gap in the AREIT market for this diversified long WALE portfolio and expect it to be attractive to both institutional and retail investors.”
“The REIT will have a market capitalisation in excess of $1 billion and Charter Hall will have a co-investment of up to $250 million. At IPO the REIT will target no debt on balance sheet and look through gearing of less than 20%”.
Charter Hall will receive a base management of 0.45% of gross asset value of the REIT. In addition, the Group will be entitled to receive other fees from the REIT including fees in connection with the acquisition or disposal of assets, property management and leasing services.
Charter Hall WALE Limited, as responsible entity of the REIT, is expected to lodge a Product Disclosure Statement (PDS) with ASIC for an offer of Securities in the REIT on 27 September 2016. It is expected the PDS will be available for download from the Offer’s website at https://www.charterhall.com.au/ from 9.00am (Sydney time) Wednesday, 5 October 2016. Investors should consider the PDS in making any decision in connection with whether to acquire Securities in the REIT.
Charter Hall has appointed J.P. Morgan Australia Limited and UBS AG, Australia Branch as Joint Lead Managers on the transaction and King and Wood Mallesons as Legal advisor.
About Charter Hall
Charter Hall Group (ASX:CHC) is one of Australia’s leading fully integrated property groups, with over 25 years’ experience managing high quality property on behalf of institutional, wholesale and retail clients. Charter Hall has over $17.5 billion of funds under management across the office, retail and industrial sectors. The Group has offices in Sydney, Melbourne, Brisbane, Adelaide and Perth.
The Group’s success is underpinned by a highly skilled and motivated team with diverse expertise across property sectors and risk-return profiles. Sustainability is a key element of its business approach and by ensuring its actions are commercially sound and make a difference to its people, customers and the environment, Charter Hall can make a positive impact for its investors, the community and the Group.
For further information, please contact
Managing Director and Group CEO
T: +61 2 8651 9142
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T: +61 2 8651 9260
¹ Portfolio weighted average rental review based on gross passing income with CPI assumed at 2%