SYDNEY, AUSTRALIA: Charter Hall Retail Management Limited (CQR) announced an extension of its partnership with bp, with an investment in a Charter Hall managed fund that has contracted to acquire a 49% interest in a portfolio of 70 Long WALE triple net leased (NNN) Convenience Retail properties leased to bp in New Zealand.
The portfolio, consisting of the majority of bp’s owned Convenience Retail properties in New Zealand, has been acquired in a sale and leaseback transaction and will have a 20-year WALE at acquisition with initial lease terms of properties in the portfolio ranging from 18 to 22 years with annual CPI rent increases (plus up to 0.5% in the first five years).
The portfolio is geographically diversified with 78% of the portfolio in metropolitan locations and 72% located in NZ’s top 3 cities. The Charter Hall managed fund will be owned 50% by Charter Hall Long WALE REIT (ASX:CLW) and 50% by Charter Hall Retail REIT and there will be no debt facility at the JV fund level.
The acquisition price of CLW and CQR’s combined 49% interest in the portfolio is approximately NZD $262 million and represents a 6.25% initial yield. Charter Hall Retail REIT’s funding commitment for its 50% interest is approximately NZD $130.8 million.
CQR will utilise available borrowing capacity denominated in NZD to fund the transaction.
Charter Hall Retail CEO, Greg Chubb said: “We are delighted to further our existing relationship with bp and partner with them in New Zealand. This investment is consistent with our strategy of partnering with major convenience retailers to meet their property needs and provide CQR unit holders with a resilient and growing income stream.”
The pro-forma impact of today’s acquisition is that bp will increase from 9.1% to 12.5% of CQR’s portfolio income. The total portfolio WALE increases from 7.4 years2 to 7.9 years and major tenants WALE from 11.7years2 to 12.2 years. Pro-forma look-through gearing post today’s acquisition will be 34.7% and within the 30-40% policy range. Completion of the transaction is subject to approval by the New Zealand Overseas Investment Office.
Charter Hall Retail REIT is the leading owner and manager of property for convenience retailers. Charter Hall Retail REIT is managed by Charter Hall Group (ASX:CHC). Operating with prudence, Charter Hall Group as Manager of CQR has carefully curated a $41.8 billion diverse portfolio of over 1300 high quality, long leased properties.
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