This article is from the Australian Property Journal archive
CHARTER Hall wholesale partnership LWHP has acquired six Bunnings assets for $353 million, marking the acquisitive platform’s seventh acquisition of a Bunnings platform since 2006.
The wholesale partnership comprises VFMC, Telstra Super and Charter Hall.
The portfolio, 85% of which is located in Sydney, Melbourne and Brisbane, was picked up on a yield of 4.63% and has a weighted average lease expiry of 10 years and 2.5% annual rent reviews.
“We are proud to further expand our strong relationship with Wesfarmers and Bunnings Group,” Charter Hall managing director and group chief executive officer, David Harrison said.
Across Charter Hall’s platform there is now in excess of $2.4 billion invested in 59 Bunnings stores, 50 of which are located in metropolitan locations.
“This transaction represents our seventh Bunnings portfolio acquired since 2006 when we first recognised the strength of the Bunnings business, the relatively low rents per square metre of lettable area and the large prime sites Bunnings typically occupy,” Harrison said.
The off-market deal was introduced to Charter Hall by Sam Hatcher of JLL.
“This off-market acquisition extends the Bunnings relationship, expands our off-market transaction track record and enhances the diversity and breadth of the LWHP partnership which has been one of our most successful partnerships delivering an IRR since inception exceeding 15%,” LWHP fund manager, Ben Ellis said.
Charter Hall has been steadily collecting Bunnings Warehouse assets across its platform in recent years. Earlier this year, Charter Hall spent $42.3 million for a brand new Bunnings warehouse of 16,000 sqm in Melbourne’s Clyde on a yield of 4.5%, with a 12 year net lease back agreement.
That followed Charter Hall Direct Consumer Staples Fund’s $35 million acquisition of a 5000 sqm multi-level Bunnings in Perth’s Claremont one year ago, with a lease running until 2027 plus options. Around the same time, Charter Hall Long WALE REIT picked up a Bunnings in Darwin.
In April last year, investors in the unlisted Charter Hall Direct BW Trust, which owns four Bunnings Warehouses in NSW and Victoria, voted overwhelmingly to extend the life of the trust by five years. Each of the assets have new 10-year leases to Bunnings. The trust has generated a 17.9% IRR since inception and forecast distributions are 9.70 cents per unit per annum, paid quarterly.
Charter Hall launched the new Direct Diversified Consumer Staples Fund three years ago, aiming to take advantage of everyday goods tenants able to weather tougher periods of economic cycles. It seeded the fund with a Bunnings Warehouse in Tasmania’s Burnie, and the initial portfolio also includes retail and industrial properties leased to Viva Energy and smallgoods producers and distributors Hans and Primo.
Charter Hall has played a leading role in Australian institutional transactional activity through 2020. Armed with heavy investment firepower and $43.4 billion funds under management as a result of its acquisitive streak, the group this month upgraded its 2021 financial year guidance.
