This article is from the Australian Property Journal archive
CHARTER Hall Retail REIT (CQR) has picked up a northern Perth convenience centre for $51.2 million from Woolworths, as it announced a $143 million uplift in portfolio value following its latest round of revaluations.
CQR had 64% of its total portfolio by gross asset value independently valued for the six months to the end of June. The result was a 4.1% uplift, from $3.504 billion to $3.647 billion, and the average cap rate compressed 22 basis points from 6.03% to 5.81%.
The trust said its shopping centre convenience retail portfolio valuation increase was $58 million or 2.1%, to $2.877 billion, with the cap rate moving from 6.21% to 6.12% over the period.
The REIT’s Long WALE convenience retail portfolio, comprising BP and Coles Adelaide distribution centre increased 12.4%, or $85 million, to $770 million. The like-for-like cap rate compressed from 5.28% to 4.70%.
“Our shopping centre portfolio has proven its resilience through the challenges of the last 12 months with strong occupancy, rent collection and retail sales growth. This is now being reflected in asset valuation gains,” Charter Hall Retail CEO, Greg Chubb said.
“Our Long WALE convenience retail assets remain highly attractive given the quality of the tenants, attractive lease structures, duration of leases and high underlying land values.
“These assets have delivered CQR unitholders highly defensive and reliable earnings over the last twelve months and are now also delivering significant growth in capital values. It’s pleasing to see the results of our on-going portfolio curation delivering these gains.”
The unaudited impact of the valuations will contribute to the increase in the estimated net tangible assets per security from $3.77 to $4.02, a $0.25 or 6.6% increase over six months.
Butler Central Shopping Centre was acquired on 6.0% cap rate. The convenience centre is located 40 kilometres of the Perth CBD and was developed and built by Woolworths in 2018. The 9,000 sqm centre is anchored by a Woolworths supermarket with BWS, Best & Less and The Reject Shop mini-majors, 30 specialty shops and 452 on-grade parking spaces.
The centre is adjacent to Butler train station, at the intersection of Butler Boulevard and Exmouth Drive, and in an established growth corridor, CQR said.
The acquisition was negotiated off-market with Woolworths and will be debt funded utilising CQR’s existing debt facilities. The transaction is expected to settle in July 2021.
“As the dominant convenience retail centre in a growing catchment, Butler Central is an excellent addition to CQR, complementing our existing portfolio of convenience and convenience plus centres,” Chubb said.
“Our ability to secure this asset off-market is a result of Charter Hall’s longstanding partnership with Woolworths.”
CQR declared a distribution for the period ending 30th June of 12.7 cents per unit.
