Popular real estate investment trust (REIT) Charter Hall Long WALE [ASX:CLW] had investors pushing up it its share price around 2% early on Thursday morning when it announced it would be distributing 14 cents a share to those holding its stock off the back of rising property values.
This is double the dividends distributed in both September and December last year but is still a far cry from the company’s $6–7 dividend average in prior reports during 2017–22.
With the CLW share price moving up 2%, it became worth around $4.71 at time of writing.
The REIT’s stock has gone up 7% in the last month and started 2023 stronger on its 5% loss over the past year.
Source: TradingView
Charter Hall’s operating earnings total $101.2 million
Australian WALE (weighted average lease expiry) REIT Charter Hall Long provided its half-year results for the period ending 31 December 2022 and said that it would be offering 14 cents a share (cps) to its investors, aka operating earnings of $101.2 million.
Among its key financial highlights, Charter Hall listed $65 million in net property valuation uplifts for the first half, which was a 0.9% rise over book values in the prior (June 2022) period.
The company also listed $6.23 in net tangible assets, a slight increase of 1% from the $6.17 reported at the end of June.
Charter’s balance sheet was geared 30.2%, sitting right within the middle target range of 25–35%.
These results were achieved through a portfolio that cycled through $112 million divestments of two short WALE industrial assets: Woolworths and Toll.
CLW posted $91 million in social infrastructure investments including Geosciences Australia on a 7.4% initial yield with nine-and-a-half-year WALE.
Charter had $14 million in hospitality investments in two Endeavor Group leases, the Emu Hotel in SA and Horse and Jockey in Queensland, with a 4.8% cap rate blend over 15 years, as triple net (NNN) CPI-linked assets.
Charter’s Fund Manager Avi Anger commented:
‘During 1H FY23, CLW has demonstrated the resilience of its portfolio. With 99.9% occupancy, 50% of income derived from CPI linked leases, 74% of drawn debt hedged, 53% of income from NNN leased assets and an 11.8 year WALE, CLW has been well placed to benefit from a higher inflationary environment and manage the impact of higher interest rates.
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‘CLW’s portfolio valuation increased as a result of the Metcash lease extension and our inflation-linked leases which drove rental growth and offset cap rate expansion across the portfolio. The quality of our properties and tenants and high proportion of NNN and CPI linked leases has resulted in CLW continuing to deliver for its investors.’
As Charter’s portfolio value increased 0.9%, the cap rate softened 6 bps from 4.35% in June to 4.41% in December, the group pinning this down to income growth offsetting the cap rate.
Given that the REIT’s average portfolio lease expiry is balanced out to around 11.8 years, there’s still ample time to make gains on long-term securities with inflationary benefits.
CLW had $349 million in cash and undrawn debt as at 31 December 2022 and reconfirmed FY23 guidance of 28 cents per share, a 6.1% distribution yield on the group’s last closing price.
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