Charter Hall has secured a $780 million investment portfolio to be owned by Charter Hall Direct and the Charter Hall Long WALE REIT.
The high quality first-generation leased portfolio comprise three office and one life science/industrial assets, with a total NLA of 69,503sqm.
Characterised by long leases to Commonwealth government or government-supported tenant customers, the portfolio has an average WALE of 9.1 years, which benefit from fixed rental increases of between 3.5 per cent and 4.0 per cent per annum (3.6 per cent weighted average rental increase).
The Portfolio will be acquired in joint venture between CLW, which will own 50 per cent 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).
Charter Hall managing director David Harrison said the acquisition grows the office portfolio to beyond $23 billion, which is secured by a 30 per cent exposure to government/government related tenants.
“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,” he said.
“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.
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 direct chief executive Steven Bennett said 50 per cent 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,” he said.
“All these funds have in excess of 96 per cent occupancy and are leased to high quality tenant customers.”
Colliers led by James Barber sourced the transaction off-market on behalf of Charter Hall.
WALE portfolio
- Services Australia building in Tuggeranong, ACT for $306 million;
- Australian Taxation Office (ATO) building in Box Hill, VIC for $230 million;
- Australian Red Cross Building in Alexandria, NSW for $159 million; and
- ATO Building in Albury, NSW for $85 million.
