Charter Hall Retail REIT expands Long WALE Convenience Retail portfolio with $101.7mn acquisitions

SYDNEY, AUSTRALIA: Charter Hall Retail REIT (ASX: CQR) has expanded its Long WALE Convenience Retail portfolio and increased income from triple net (NNN) leases directly linked to CPI.

CQR has acquired a portfolio of 18 Gull service stations in New Zealand and further expanded its partnership with Ampol Ltd, acquiring a 5% interest in an existing Charter Hall partnership that owns a portfolio of 204 Ampol service stations predominantly located in metropolitan centres on Australia’s eastern seaboard.

The combined value of the acquisitions is $101.7 million. The acquisitions will be funded from existing investment capacity and are accretive to earnings, lifting the weighted average rent reviews the CQR portfolio delivers.

The Gull NZ convenience retail portfolio consists of the majority of Gull’s 100% owned network in New Zealand. The portfolio is predominantly located in metropolitan centres, with 56% located in Auckland and 5% in Wellington. The portfolio WALE is 15 years and the purchase price of NZD$64.5 million (AUD $58.1 million) represents a core cap rate of 6.40%.

The portfolio was secured off-market through a sale and leaseback agreement negotiated directly between Charter Hall and the vendor.

CQR is also pleased to further expand its relationship with Ampol Ltd, with the acquisition of a 5% interest in an existing Charter Hall partnership, which owns a 49% interest in a portfolio of 204 Ampol convenience retail assets (APT). APT’s assets are well positioned with 85% located on the Australian eastern seaboard, and 83% of assets in metro or commuter metro locations.

The portfolio has a 17.7-year WALE and the purchase price of $43.6 million represents an initial yield of 4.53% prior to the CPI rent review in Q2FY23.

All leases for the Gull and Ampol portfolios are capital light, NNN and with annual CPI linked reviews. In combination, the acquisitions will increase CQR’s exposure to direct inflation-linked earnings by approximately 2%. Consistent with Charter Hall’s existing service station assets, site remediation issues remain the operator’s responsibility.

Charter Hall Retail CEO, Ben Ellis stated: “I’m delighted to announce this expansion in our Long WALE convenience retail portfolio. These acquisitions, secured off-market, raise the weighted average rent review and growth delivered from the portfolio annually. They provide CQR investors with a rare opportunity to access a growing inflation-linked earnings stream in a highly capital efficient manner.

They also further expand our relationship with major retailer Ampol Ltd, while introducing Gull to our tenant mix. The acquisitions are accretive to earnings and further increase the resilience of CQR’s portfolio and the quality of income.”

CQR will report the REIT’s Financial Year 2022 Results on 23 August 2022.

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