Charter Hall Group on the way to managing $40bn
The firm’s strategy is helping to reshape both the Charter Hall operation and the Australian property scene.
The Charter Hall Group is on the way to managing $40bn worth of real estate funds after striking deals to acquire $1.25bn of fresh properties including a portfolio of BP service stations and a major Arnott‘s facility.
The group has placed the assets across a series of listed and unlisted trust it runs, with the bulk of them destined for the company’s specialist long leased property fund.
Under chief executive David Harrison, Charter Hall has splurged on long leased assets, buying them up as pension fund and listed property investors seek out real assets offering steady returns in the era of exceptionally low bond yields.
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The firm’s strategy is helping to reshape both the Charter Hall operation and the Australian property scene with the company often emerging with assets that are spun out of private equity takeovers and also taking on a larger portfolio style deals away from traditional areas of offices and warehouses as it now takes on petrol stations and social infrastructure.
Charter Hall said the $1.25bn of acquisitions included an $840m investment in a new managed partnership that has contracted to acquire a 49 per cent interest in a $1.7bn portfolio comprising 225 convenience retail properties leased to BP Australia with a 20-year WALE triple net lease. JPMorgan acted for BP.
The group also announced the $398.9m acquisition of a 32-year WALE triple net leased industrial facility, in a sale and leaseback from Arnott’s, in the prime Huntingwood precinct of Sydney’s western suburbs. UBS and CBRE brokered the Arnott’s deal.
The BP portfolio consists of the majority of BP’s owned convenience retail properties in Australia. The portfolio has a WALE of 20 years, with staggered lease expiries from 18 to 22 years and triple-net structure with annual CPI increases.
The Charter Hall-managed partnership will be owned half by Charter Hall Long WALE REIT, 30 per cent by the Charter Hall Retail REIT and 20 per cent by Charter Hall.
Charter Hall’s equity commitment for its 20 per cent interest is about $90m, which will be funded through existing investment capacity.
The listed long-lease trust is undertaking an underwritten $350m equity raising on Thursday via JPMorgan and UBS that includes an accelerated non-renounceable entitlement offer and placement. Charter Hall will invest about $20m in the raising.
The deal will boost the long-leased trust’s weighted lease term to 14.9 years with a lift in earnings per share growth of 5.2 per cent over last year.
“Our success in partnering with global multinational and Australian-based corporates in sale and leaseback activities continues to benefit our tenant customers while providing opportunities for our diverse range of investors,” Mr Harrison said.
“The creation of this partnership continues Charter Hall’s growth of new partnerships and funds, while further extending the group’s long WALE investment strategy,” he added.
Charter Hall’s previous fiscal 2020 guidance was for post-tax operating earnings per security growth of 18-20 per cent over last year.
Given the significant acquisition activity and resultant fund growth beyond $38bn the company upgraded its fiscal 2020 guidance to about 30 per cent growth in post-tax operating earnings per security.
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