Charter Hall Long WALE REIT (ASX:CLW) 1H19 results


by Jessica Amir

Charter Hall Long WALE REIT (ASX:CLW) Fund Manager, Avi Anger talks 1H19 results, portfolio metrics, acquisitions and FY19 outlook.

Jessica Amir:
Welcome to the Finance News Network, my name’s Jessica Amir. Today I’m with Charter Hall Long WALE REIT (ASX:CLW) Fund Manager, Avi Anger. Avi, welcome back.

Avi Anger: Thank you Jessica, thanks for having me.

Jessica Amir: For those who aren’t familiar with the Real Estate Investment Trust, the CLW, just give us a quick introduction.

Avi Anger: Charter Hall Long WALE REIT is a listed Real Estate InvestmentTrust; we’re an ASX 200 entity. And the focus of the REIT is to invest in long lease property, leased to high-quality tenants on long leases. The aim of the Trust is to provide income and capital growth for our investors, over the long-term. So our total assets under management at 31 December is approximately $1.9 billion, and our market cap is about $1.2 billion.

Jessica Amir: You’ve just handed down your first half 2019 results. Just take us through some highlights?

Avi Anger: Highlights for the period is we delivered earnings per share of 12.9 cents, per security for the half year. And we’re on track to deliver our guidance of 26.8 to 26.9 cents, per security. Our cap rate across our portfolio is about 6.2 per cent, our average rent review is 2.8 per cent per annum. And what that means for investors is that we’re able to deliver income growth, with that 2.8 per cent coming through on our leases on average. And our cap rate is very attractive at 6.2 per cent, relative to what you can buy in the physical market.

Jessica Amir: You’ve had a very busy first half undertaking a lot of transactions. Just give us an update on what’s been taking place?

Avi Anger: During the half-year we completed $666 million of transactions. There was $492 million of acquisitions and $174 million of divestments. Those acquisitions are diversified across sectors, office, industrial, retail and agri logistics. And provided all those acquisitions on average were a 14-year WALE, which helped increase that WALE for the half-year, to 12.6 years.

Importantly, the vast majority of those transactions were secured off market. So the benefit of our management platform has helped us secure those really high quality opportunities, for our investors.

Jessica Amir: Now can you give us an update on your properties and the tenant profile?

Avi Anger: The tenant profile of our REIT is quite unique. We have very high quality tenants across our portfolio, with over 95 per cent being ASX listed, credit rated or multinational companies. Approximately 20 per cent of our portfolio is leased to government. And about 60 per cent of our portfolio is leased to non-discretionary grocery providers, such as Coles Group (ASX:COL) and Woolworths Group (ASX:WOW).

Our portfolio is split across property sectors. We have a combination of office, industrial, long lease retail and agri logistics in our recently acquired Inghams portfolio.

Jessica Amir: You mentioned you’ve got some new major leases in the Inghams portfolio. What impact will this have?

Avi Anger: We acquired a portfolio of 27 properties that were leased to Inghams, for approximately 15.8 years. That acquisition was completed in December. We announced on Friday that we’ve now extended some of those leases in that portfolio. So the average lease term in that portfolio is now increased from 15.8 years to 24.6 years, which is a really great outcome for us. And what that means is that the overall lease expiry profile of the REIT, has increased now to 12.6 years at 31 December.

Jessica Amir: Just a more general question now Avi. What are companies that enter long-term leases looking for?

Avi Anger: I think companies are looking for landlords that they can work with in a co-operative and collaborative manner. So we at Charter Hall have very strong relationships with a number of the major tenants in my REIT, including groups like Coles, Woolworths, Inghams for example. ALH Hotel Group is another group, where we own 58 pubs in a joint venture that are leased to ALH. And we’ve been able to work with ALH to acquire new properties and extend leases,the same way that we’ve doneon the recently acquired Inghams portfolio. I think companies want to work with landlords, who they can have a really strong relationship with.

So for us, we’re able to extend leases and given we’re a long lease REIT, that’s important for our investors to be able to deliver that. And for the tenant, they’re able to work with a landlord that they can get on well with and really manage their businesses, in an optimal way.

Jessica Amir: Just lastly, what’s your guidance for the full financial year?

Avi Anger: In December when we announced the Inghams acquisition, we upgraded our guidance to 26.8 to 26.9 cents per security, for the full year. And we’ve confirmed that guidance going forward at our results, so we’re on track to deliver that. That represents a 1.5 to 1.9 per cent increase over our FY18 result. It’s a really positive outcome and we continue to deliver earnings growth to our investors

Jessica Amir: Avi Anger, thank you so much for your time and well done in your results.

Avi Anger: Thanks Jessica, thanks for having me on today.


Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.