Transcription of Finance News Network Interview with Charter Hall Long WALE REIT (ASX:CLW) Fund Manager, Avi Anger
Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from the Charter Hall Long WALE REIT (ASX:CLW) is Fund Manager, Avi Anger. Avi, welcome to FNN.
Avi Anger: Thank you.
Carolyn Herbert: Can you start by giving us an introduction to the Charter Hall Long WALE REIT?
Avi Anger: The Charter Hall Long WALE REIT is an Australian Real Estate investment trust, listed on the Australian Stock Exchange. The REIT has about $1.3 billion of assets with 76 properties in the REIT across office, industrial and retail. The mandate of the REIT is to invest in high quality properties, leased to corporate and government tenants. About 80 per cent of our portfolio’s leased to credit rated tenants, including the Commonwealth Government, Woolworths (ASX:WOW), Wesfarmers Limited (ASX:WES) and Westpac Banking Corp (ASX:WBC).
Carolyn Herbert: You’ve just released your first half results for 2017. What were the highlights?
Avi Anger: The highlights were that for the period from listing on the 8th of November to 31 December, we increased the assets of the REIT with the acquisition of a portfolio of 10 industrial properties, leased to Suez (EPA:SEV) on a long term lease back. The NTA of the REIT increased from $3.84 at listing to $3.88, and the earnings of the REIT was also very positive. And we’ve now upgraded our guidance for the balance of the year, from 16 cents to 16.2 cents.
Carolyn Herbert: A big focus of the REIT is WALE. So why is WALE so important to investors?
Avi Anger: WALE refers to the weighted average length of leases and in our portfolio; our WALE is 12.2 years, which is one of the longest in the sector. WALE means that when leases expire, you typically would have a period of down time and incentives. And with a long WALE, it reduces the risk of that for some time. This allows us to provide to our investors, stable and secure income over a long period of time, with a very low proportion of our leases expiring over the next five and 10 years.
Carolyn Herbert: You have a mix of different sectors in the portfolios. So can you explain what types of property you own?
Avi Anger: We have a diversity of office, industrial and retail property in the portfolio. Our industrial property is predominantly logistic facilities, leased to high quality tenants, including Coles Group Limited and Woolworths (ASX:WOW) for their distribution centre requirements. In the office part of our portfolio, we have office buildings that are leased to the Australian Government and with the Australian Tax Office being the major tenant there, as well as Westpac Bank Corp (ASX:WBC).
And in retail we own a portfolio of 54 hospitality assets, which are leased to the Woolworths backed ALH Group. So there’s a strong focus across our portfolio of long leased assets to high quality tenants.
Carolyn Herbert: What’s the relationship between Charter Hall Group (ASX:CHC) and the Long WALE REIT?
Avi Anger: Charter Hall is the manager of Long WALE REIT. Charter Hall’s one of the largest property groups in Australia, with $18 billion funds under management. That’s across 304 properties with about 2,600 tenant customers. There are 450 people approximately working at Charter Hall. It’s a vertically integrated group from asset management, property management, acquisitions, finance and legal. And the REIT’s able to benefit from the national presence and the expertise across that group, for managing its property and also sourcing opportunities for the REIT.
Importantly, Charter Hall is aligned with the REIT in that it has a 19.7 per cent investment in the REIT, which is about $160 million. So the manager is aligned with the REIT in that regard.
Carolyn Herbert: Finally Avi. What’s your guidance for the Long WALE REIT for the remainder of FY17?
Avi Anger: Our guidance for FY17 in our PDS in November was 16 cents per unit for the period. With this result, we’ve upgraded the guidance for FY17 to 16.2 cents per unit, which is an increase of 1.2 per cent. We’re targeting 100 per cent payout ratio. And on an annualised basis that’s 25.4 cents per unit, which at our $4.00 issue price, represents a yield of about 6.4 per cent. Which is very attractive to investors in this low interest rate environment.
Carolyn Herbert: Avi Anger, thanks for the update.
Avi Anger: Pleasure.