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Charter Hall Retail (ASX:CQR) enjoys valuation rise and new acquisition

Commercial, Real Estate
ASX:CQR      MCAP $1.883B
16 June 2021 13:50 (AEDT)

Butler Central Shopping Centre. Source: Proven

Charter Hall Retail REIT (CQR) has announced an uplift in its portfolio valuation alongside the acquisition of a WA shopping centre for $51.2 million.

CQR had 64 per cent of its portfolio by gross asset value independently valued as at June 20, 2021, and enjoyed a $143 million bump, a 4.1 per cent rise.

The overall portfolio value has increased from $3.504 billion to $3.647 billion and the portfolio average cap rate has compressed from 6.03 per cent to 5.81 per cent.

CQR’s shopping centre convenience retail portfolio increased in value by $58 million, or 2.1 per cent, from December 31, 2020 to June 30, 2021, with the cap rate increasing from 6.21 per cent to 6.12 per cent.

Over the period from December 31, 2020 to June 30, 2021, the REIT’s long weighted average lease expiry convenience retail portfolio, which includes BP and Coles Adelaide distribution centre, witnessed a value increase of $85 million.

This represented a 12.4 per cent, with the like-for-like cap rate compressing from 5.28 per cent to 4.7 per cent.

Charter Hall Retail CEO Greg Chubb said the valuations demonstrated the resilience and attractiveness of its portfolio.

“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,” he 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.”

Charter Hall Long WALE REIT (CLW) also enjoyed a bump to its portfolio valuation recently, increasing by $373.4 million.

The unaudited impact of the valuations announced today will contribute to the increase in the estimated NTA per security from $3.77 to $4.02, a $0.25 or 6.6 per cent increase on the December 2020 NTA.

CQR also declared a distribution of 12.7 cents per unit for the period ending June 30, 2021.

Butler Central, WA Acquisition

The company is also acquiring the Butler Central Shopping Centre in WA for $52.1 million on a six per cent cap rate.

Butler Central Shopping Centre is a Woolworths-developed and-built convenience store located 40 kilometres north of Perth’s CBD.

The 9000-square-foot GLA centre features a Woolworths grocery, as well as BWS, Best & Less, and The Reject Shop mini-majors, 30 specialised stores, and 452 on-grade parking spots.

CQR’s existing debt facilities will be used to fund the transaction, which was negotiated off-market with Woolworths, with the deal scheduled to close in July 2021.

Mr Chubb said the off-market deal was a result of its longstanding partnership with Woolworths and said the centre is complimentary with its current portfolio.

CQR shares were up 1.29 per cent, rounding off the day of trading at $3.93.

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