This article is from the Australian Property Journal archive
CHARTER Hall Retail REIT has forked out $111.8 million for a 52% interest in a Coles distribution facility in Adelaide as heavy hitters show a penchant for logistics and industrial investments.
The distribution facility is located in industrial precinct of Edinburgh Park and is utilised by Coles as its sole distribution centre to service all of its retail stores in South Australia and the Northern Territory.
Coles has a remaining lease term of 14.5 years plus multiple options and fixed annual reviews of 2.75%.
The Charter Hall Retail REIT (CQR) portfolio now has exposure to 276 convenience, convenience-plus and long WALE retail properties.
The property has been owned by a Charter Hall partnership between three funds and the major 52% ownership fund reached the end of its defined investment term. Two Charter Hall Direct managed funds continue to hold the remaining 48% interest.
CQR’s equity investment post settlement today for the stake is about $60 million, out of its $465 million of liquidity at the end of June – a figure further increased following the divestment of Pemulwuy Market Place and West Ryde Market Place for $126.5 million.
The trust raised $300 million in April in a bid to strengthen its balance sheet and manage the covid-19 pandemic. During the June quarter, CQR was able to collect over half of its rent due to Coles and Woolworths anchoring much of its portfolio.
Acquisition of the Coles facility increases portfolio and major/anchor tenant WALE by 0.2 years, and Long WALE retail property weighting to 13% of the total CQR portfolio, consisting of the 19.4 year WALE BP portfolio and this Coles 14.5 year WALE investment.
“This acquisition increases the certainty of income through a long 14.5 year lease, provides growth for CQR investors through fixed rental escalations, and improves the resilience and security of income by further increasing CQR’s exposure to Coles,” Charter Hall Retail REIT’s chief executive officer, Greg Chubb said.
“Today’s acquisition fits in our Long WALE Retail property category and is consistent with CQR’s strategy is to be the leading owner and manager of property for convenience retailers.”
