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Charter Hall Long WALE REIT announces 1H FY20 results

Phil Harpur
Real Estate Investment Trust

The Charter Hall Long WALE REIT (ASX: CLW) share price is trending higher today following the release of its 1H FY20 results this morning.

Charter Hall Long WALE REIT is a real estate investment trust (REIT) that is managed by Charter Hall Group (ASX: CHC), one of Australia’s leading fully integrated property groups.

The CLW REIT manages a broad portfolio of listed and unlisted property funds for institutional, wholesale and retail investors. CLW is focused on assets that are predominantly leased to tenants with strong covenants on long term leases. It currently manages nearly 400 properties across the office, industrial and retail sectors.

What did the CLW REIT announce?

Financial highlights for the six months to December 2019 include operating earnings of $52.2 million, up 8.5% on the prior corresponding period (pcp). Statutory profit was reported as $80.5 million, up 8.5% on pcp.

Net tangible assets came in at $4.52, up 10.5% from $4.09 at 30 June 2019, while balance sheet gearing of 23.8% was below the target range of 25% to 35%. During the half year, the REIT raised $864.7 million of new equity.

Operating highlights include portfolio weighted average lease expiry (WALE) of 14.5 years, up from 12.5 years at 30 June 2019. Additionally, total property portfolio value stands at $3.59 billion for the period, up from $2.1 billion as at 30 June 2019. The increase was driven primarily by acquisitions.

Portfolio update

During 1H FY20, CLW announced $1.4 billion of new property acquisitions.

Seven major acquisitions were reported during the half-year. One of these was a $349 million acquisition of a 50% interest in a Charter Hall managed partnership that acquired a 49% interest in a strategic portfolio of 36 Telco Exchange properties 100% leased to Telstra Corporation Ltd (ASX: TLS).

Another was a $420.1 million acquisition of a 50% interest in a partnership that acquired a 49% interest in a portfolio of 225 long WALE convenience retail properties, 100% leased to BP Australia.

There also was the $165.7 million acquisition of a 50% interest in The Glasshouse, Macquarie Park, an office development 70% pre-committed to the NSW Government on a 12-year lease.

Valuations

Overall, the CLW REIT’s total property portfolio increased by approximately $1.44 billion to $3.59 billion for the period, driven by $1.37 billion of net acquisitions and capital expenditure and $83 million in property revaluations.

At the end of the period, the REIT’s diversified portfolio was 99.8% occupied and comprised 384 properties with a long WALE of 14.5 years. The portfolio weighted average capitalisation rate firmed 46 bps during the period to 5.49% by 31 December 2019.

FY20 operating earnings guidance

The REIT confirmed that barring any unforeseen events and no material change in current market conditions, CLW’s guidance for FY20 remains unchanged from the guidance announced on 12 December 2019.

The guidance consists of operating earnings per share of 28.3 cents per security, while the target distribution payout ratio remains at 100% of operating earnings.

The post Charter Hall Long WALE REIT announces 1H FY20 results appeared first on Motley Fool Australia.

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Motley Fool contributor Phil Harpur owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020