This article is from the Australian Property Journal archive
THE Charter Hall Retail REIT (CQR) is offloading its share in an Adelaide Coles distribution centre (CDC) for $150 million, and will use the funds to acquire a half-stake in a portfolio of New Zealand fuel stations.
It will spend $120 million on a 49% interest in the fuel station portfolio that comprises 51 triple-net-leased (NNN) convenience assets leased to Z Energy, which has just been acquired by Ampol. Z Energy will retain a 51% interest.
CQR has also recently picked up a 49% interest in another portfolio of 20 Ampol fuel and convenience retail centres for $50.5 million, spent $108 million on 18 Gull petrol station assets also in New Zealand and extended its interest in a Charter Hall partnership with Ampol that owns a portfolio of 205 Ampol sites.
CQR’s interest in the Z Energy portfolio has been acquired for on a 5.50% capitalisation rate with annual NZ CPI rent escalations with a 2% floor and 5% cap, and a 15.3-year weighted average expire lease (WALE). Nearly 80% of the portfolio is located in metropolitan areas.
CQR bought the 52% in the Coles distribution centre for $111.8 million two years ago amid the pandemic rush towards industrial and logistics assets. It has divested the stake at book value to a Charter Hall managed fund, and expects $95.3 million in net proceeds that will be directed to the Z Energy portfolio acquisition.
“CQR’s investment in the CDC has been highly successful. We’re now looking to take advantage of strength in the demand for industrial and logistics assets and to recycle these proceeds into an attractive NNN portfolio of Long WALE convenience assets with CPI exposure,” said Charter Hall Retail CEO, Ben Ellis.
Following settlement of the off-market deal, expected for both by the end of October, 37% of major tenant rent reviews are CPI based and 33% NNN leases.
After posting a 5.2% increase in full-year earnings last week, CQR yesterday also upgraded its FY23 earnings per unit guide to no less than 28.7c per unit, reflecting growth of at least 1%, and distributions per unit to no less than 25.7c, showing growth of 5.3%.
