Charter Hall property trust announces trio of acquisitions and $242 million equity raise

Written on the 4 November 2019 by David Simmons

Charter Hall property trust announces trio of acquisitions and $242 million equity raise

Three major acquisitions and a $242 million equity raise will boost the portfolio of Charter Hall's (ASX: CHC) real estate investment trust (ASX: CLW).

The trust has entered into agreements to acquire interests in two office buildings located in Melbourne and Sydney, and a Bunnings Warehouse site in Darwin.

In total, the three acquisitions will cost Charter Hall Long WALE REIT $331.5 million, with the costs to be partially funded by a $242 million equity raise by the trust's manager Charter Hall.

One of the acquisitions is the Melbourne global headquarters of telco giant Telstra, of which 15 per cent is being acquired directly from the trust's manager for $63.6 million. Charter Hall remains a part-owner in the building, now holding a 1.8 per cent stake.

"This is a great opportunity for CLW to acquire a high-quality Melbourne CBD asset with a long WALE to Telstra, one of Charter Hall Group's key tenant customers," says managing director and group CEO of Charter Hall David Harrison.

"Charter Hall Group will continue to maintain exposure to this asset through its co-investment in CLW, the Charter Hall Prime Office Fund and directly on balance-sheet."

Charter Hall only recently acquired its stake in the Telstra tower back in July, when it snapped up the Melbourne building for $830 million.

The building was purchased off market by a partnership involving Charter Hall, the Charter Hall Prime Office Fund (CPOF) and the Public Sector Investment Board.

Telstra's global HQ stands at 242 Exhibition Street in the Melbourne CBD, comprising 47 storeys which provides for 65,913sqm of net lettable area (NLA).

The property is currently undergoing an extensive building upgrade works program, which includes mechanical upgrades and enhanced end of trip facilities.

The acquisition follow's Charter Hall and CLW's significant spend on a portfolio of 37 Telstra properties.

In August, Charter Hall led a consortium of buyers, which included Charter Hall, its real estate trust, and an unnamed wholesale capital partner, to acquire the 37 properties for $700 million.

The second acquisition is a 50 per cent interest in The Glasshouse in Macquarie Park, Sydney, for $165.7 million.

The property is a new office building under construction that is substantially pre-committed to the NSW Government on a 12-year lease.

Finally, CLW will acquire a 100 per cent interest in Bunnings Palmerston, Darwin, for $41.3 million. A brand-new Bunnings store will be built on the site soon.

"These acquisitions are modern and well located properties that significantly enhance the CLW portfolio," says fund manager Avi Anger.

"These properties feature long leases to high quality tenants with 83 per cent of income derived from NSW Government, Telstra and Bunnings Group Limited."

Post-acquisitions CLW will have 158 properties in its portfolio, worth $2.87 billion in total.

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Author: David Simmons

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