CLW - Charter Hall Long WALE REIT

[System]

Charter Hall Long WALE REIT will be an Australian Real Estate Investment Trust (REIT) listed on the ASX and will seek to invest in high quality Australasian properties that are predominantly leased to corporate and government tenants on long-term leases.

The REIT will comprise an Initial Portfolio of 66 Properties independently valued at $1,253 million with a weighted average capitalisation rate (WACR) of 6.4%, a weighted average lease expiry (WALE) of 12.5 years and 100% occupancy. The Initial Portfolio will be diversified by geography and real estate sector containing office, industrial and retail properties located in six Australian states.

It is anticipated that CLW will list on the ASX during October 2016.

https://www.charterhall.com.au/Funds/Other/Charter-Hall-Long-WALE-REIT/

 

[Cam019]

 

[So_Cynical]

Floated early NOV 2016 at $4 per share with a market cap of 825 million, these guys have been busy over the last 4 and a bit years growing the market cap to 2.65 Billion with capital raisings at the following prices.

1. 2017 - $4.15
2. 2018 - $4.04
3. 2019 - $4.67
4. 2019 - $5.20
5. 2019 - $5.35
6. 2020 - $4.85
7. 2020 - $4.65

These guys like to issue shares but to be fair they have purchased well and now have a good mix of RE assets, very low exposure to shopping centres and offices, debt is cheap at about 4% and very diversely held with many mixed short and long maturity's. The dividend stream has been consistent and slowly growing paying about $1.10 since listing, trading at $4.65 at the moment with a little downwards momentum, yield about 5.7% and reasonably safe, in a super low interest world CLW looks like good value to me compared to a TD or bond type investment.
~

 

[Trav.]

These guys like to issue shares but to be fair they have purchased well and now have a good mix of RE assets

@So_Cynical when you mentioned issuing shares I thought that we would be talking 1B plus but there appears to be 571M shares issued, which I found interesting.

Thanks for the summary and bringing it to our attention.

 

[Logique2]

Last forum post in 2017 . An informed investor can always make money

 

[rnr]

Last forum post in 2017 . An informed investor can always make money

Hi @Logique2,

Not quite shore if you have posted in the right thread, given your comment re "last forum post".

Cheers, Rob

 

[Logique2]

Hi @Logique2,

Not quite shore if you have posted in the right thread, given your comment re "last forum post"

. Loe

Thanks Rob (rnr),
CLW suits this market cycle very well.
I've been here before..regards L2

Hi @Logique2,

Not quite shore if you have posted in the right thread, given your comment re "last forum post".

Cheers, Rob

Hi @Logique2,

Not quite shore if you have posted in the right thread, given your comment re "last forum post".

Cheers, Rob

Hi @Logique2,

Not quite shore if you have posted in the right thread, given your comment re "last forum post".

Cheers, Rob

 

[rnr]

Thanks Rob (rnr),
CLW suits this market cycle very well.
I've been here before..regards L2

Ok, I now understand! (Must be getting old me thinks)

 

[Logique2]

Forum software going a bit silly..
Solid defensive stock CLW, parent company under a bit of near term pressure (Dec 2021).
Holding, not the slightest concern here..

 

[Value Collector]

CLW is now my second largest holding, with SYD being taken over I have moved the capital into CLW, I also have a smaller holding in the parent CHC.

Basically CLW is a highly diversified property portfolio, with long leases into place, properties range from Telstra data centres and exchanges, a Brisbane city council Bus depot, an Arrnotts biscuit factory, coles and Woolies distribution centres, Bunnings stores, office buildings, pubs and many other logistics assets.

Currently it pays a 6% dividend, and that should rise steadily due to the rental increases built into the long leases, and there should also be capital growth over time atleast to cover inflation.

So for me I am basically looking at this as being a fairly secure income stream that is inflation hedged.

 

[againsthegrain]

Was looking to pick some up, the div coming in at 7.6 cents works out just under 3% payout. I haven't studied this company, was this drop expected from the previous 6% mentioned?

Still feels like a safe place to lock some $ in however could pick more fmg for a superior div, but always good to diversify.

U still holding vh? any back of the napkin guesses for next div or too early to say?

 

[Value Collector]

Was looking to pick some up, the div coming in at 7.6 cents works out just under 3% payout. I haven't studied this company, was this drop expected from the previous 6% mentioned?

Still feels like a safe place to lock some $ in however could pick more fmg for a superior div, but always good to diversify.

U still holding vh? any back of the napkin guesses for next div or too early to say?

Dividend is around 6%, it’s a quarterly divvy so it’s paying 7.5cents for 3 months, there won’t be any big surprises for future dividends, just steady dividend growth of around 5% per year due to built in rental increases in their long term leases.

I purchased another parcel of these yesterday, it’s replaced SYD in my portfolio, since SYD was taken over,

 

[againsthegrain]

Dividend is around 6%, it’s a quarterly divvy so it’s paying 7.5cents for 3 months, there won’t be any big surprises for future dividends, just steady dividend growth of around 5% per year due to built in rental increases in their long term leases.

I purchased another parcel of these yesterday, it’s replaced SYD in my portfolio, since SYD was taken over,

quarterly, missed that! yep sold me.

Yeah im shopping always for boring old stocks to make up for no existent savings interest.

Thanx for the quick reply

 

[Logique2]

On ASX just announced the March Quarterly @ .0763

 

[againsthegrain]

so my simple logic here is, share dips because of obvious rba announcement, perhaps getting close to div payout.

More importantly IR, so they most likely be somewhere at 3% by years end. Clw will make up for the loss by rent increases as VC said, it might be delayed until that kicks in.

The RE in the portfolio yes will drop in value, but as long as the rent is increased we still turning roughly the same operation with slightly less value on paper.

So a few people get spooked, yell crash sp slips a bit, but at the same time if the divy is the same the logical investor will keep the stock.

I guess for me the opportunity cost has to be weighted out, wait and see where share price is at the end of year. Miss out on extra div until then, getting cheaper stock vs projected div payout until. I am not sure/hope the sp would drop that much by years end.

Then again the div might also decrease with IR up and rent increases lagging behind.

Whats your take on my thinking VC?

 

[Value Collector]

so my simple logic here is, share dips because of obvious rba announcement, perhaps getting close to div payout.

More importantly IR, so they most likely be somewhere at 3% by years end. Clw will make up for the loss by rent increases as VC said, it might be delayed until that kicks in.

The RE in the portfolio yes will drop in value, but as long as the rent is increased we still turning roughly the same operation with slightly less value on paper.

So a few people get spooked, yell crash sp slips a bit, but at the same time if the divy is the same the logical investor will keep the stock.

I guess for me the opportunity cost has to be weighted out, wait and see where share price is at the end of year. Miss out on extra div until then, getting cheaper stock vs projected div payout until. I am not sure/hope the sp would drop that much by years end.

Then again the div might also decrease with IR up and rent increases lagging behind.

Whats your take on my thinking VC?

Yep, Also a very important point to note is that CLW is currently only carrying debt equal to 30% of its portfolio, and 56% of this debt is fixed/head fed.

So interest rate rises will increase the amount of interest they pay, but the affect this will have on their free cashflow and ability to pay dividends is going to be limited because the over all debt is small and a chunk of it is fixed interest or hedged.

So due to hedging the affect will come on slowly, and as you mentioned their rental income on their portfolio as a whole will rise by more that the interest increases on the much smaller portion of debt they hold.

Also, they currently only have 30% debt, but their target debt level is a top of 35%, so they have about $4 Billion in capacity to make new purchases, so if property prices drop, they are in a position to make some good buys.

Here are 3 screen shots from the most recent announcement I have circled to show the low debt level, they hedging and the built in rental increases.

 

[againsthegrain]

Thanks for that! great analysis and provide info on a platter for me. This reinforces my view then it is a quality stock to accumulate. I will try to pace myself and look for good opportunities to pick some more up in the aftershocks of IR rises

 

[Dona Ferentes]

I remember REITs on a LVR of 30% coming unstuck in the last rate rise cycle. They probably lost a tenant or 3, and got squeezed with lower income and higher debt repayments.

I'd think the market is repricing risk, at present.

 

[So_Cynical]

I remember REITs on a LVR of 30% coming unstuck in the last rate rise cycle. They probably lost a tenant or 3, and got squeezed with lower income and higher debt repayments.

I'd think the market is repricing risk, at present.

2007/8 GFC a few REIT's were in trouble with gearing around 45 to 55% and had issues raising money to maintain debt covenants.

Really shouldn't be an issue for CLW.

 

[Value Collector]

2007/8 GFC a few REIT's were in trouble with gearing around 45 to 55% and had issues raising money to maintain debt covenants.

Really shouldn't be an issue for CLW.

Yep, but back in the GFC the issue was not being able to roll over the debt, not the interest rates I don’t think that exact situation will happen again.

I ran some number on CLW, and their break even point where their 30% LVR debt would be consuming all the cashflow generated leaving none for dividends is an interest rate of about 18%, and I don’t think that will happen any time soon, and if it did it wouldn’t be sustainable for long.

In the mean time, as I described above it’s nothing to really worry about, it’s just all part of the cycle, and their debt is low and their assets quality.