Charter Hall Long WALE REIT (ASX: CLW) Edges Up With Acquisition Of New Brisbane CBD Office Asset

Charter Hall Long WALE REIT (ASX: CLW), an Australian Real Estate Investment Trust, has inked a contract to acquire about 50 percent stake in 85 George Street in the Brisbane CBD, and Charter Hall Direct PFA Fund (PFA) is being named to acquire the remaining interest in this property. The acquisition of the property has been slated to be worth a consideration of $ 60.0 million. The property under discussion is a 17-storey office building and car park that has a net lettable area (NLA) of about 10,550 sqm with 105 car parking bays; and the area is opposite the new Queens Wharf integrated casino and entertainment district.

The move has come as the groups, CLW and PFA intend to start with a building refurbishment program at the aforesaid property; and the total cost to CLW and PFA has been estimated to be over $ 102 million taking into account the completion of works as well as payment of tenant incentives. This is indicative of an initial yield of 6 per cent with a rate of $9,687 / sqm of lettable area. The groups have indicated to complete the refurbishment program by January next year. It has also been decided that the building will be 100 per cent leased to government tenants post completion of all the works. It will also have a WALE of 10 years. While most of the terms are being set, the transaction is still conditional on how CLW and PFA finalise the tenancy documentation and how the same is executed. Meanwhile, transaction settlement has been planned for October 12, 2018. 

The key aspect to note is that the above acquisition along with an earlier acquisition of a 50 per cent interest in 40 Tank Street, the Club Hotel, Waterford sets a diversified portfolio of properties with better tenant quality, income stream and attractive geographic weighting to the east coast markets. The group also believes that the acquisition will provide a better exposure to the improving Brisbane CBD office market; and the property may get a boost from the Queens Wharf development slated for completion in year 2022.

As of now, the group retained its guidance for FY19 Operating Earnings per share of between 26.4 – 26.6 cents per security. The stock edged up about 0.24% on October 02, 2018 (12 PM AEST).

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