How Is Charter Hall Long WALE REIT Navigating Rising Rates with Strategic Acquisitions?
Charter Hall Long WALE REIT reported steady FY25 earnings with strong occupancy and a strategic shift toward government-leased assets, setting the stage for growth in FY26.
- FY25 operating earnings of $178.6 million with 25.0 cents per security distributions
- Portfolio occupancy at 99.9% and weighted average lease expiry of 9.3 years
- Completed $338.8 million in net property divestments and $222.9 million in accretive acquisitions post balance date
- Refinanced $310 million debt extending maturity to FY30 and hedged 89% of debt
- FY26 guidance raised to 25.5 cents per security distributions, implying a 6.1% yield
Steady Earnings and Strong Portfolio Fundamentals
Charter Hall Long WALE REIT (ASX – CLW) has delivered a solid financial performance for the full year ending June 30, 2025, reporting operating earnings of $178.6 million, equating to 25.0 cents per security. Distributions matched this at 25.0 cents per security, underscoring the REIT’s commitment to delivering consistent income to investors. The portfolio remains robust, with occupancy holding at an impressive 99.9% and a weighted average lease expiry (WALE) of 9.3 years, reflecting long-term income security.
Active Portfolio Management Amid Market Challenges
In a challenging interest rate environment, the REIT has taken a proactive approach to portfolio curation. During FY25, it divested $338.8 million in properties, including the Inghams agri-logistics portfolio and several retail assets, while post balance date acquisitions totaling $222.9 million have focused on high-quality, government-leased social infrastructure properties. Notable acquisitions include stakes in Department of Defence and Australian Border Force facilities, signaling a strategic tilt towards stable, long-term government tenants.
Capital Management and Debt Refinancing
Charter Hall Long WALE REIT has also strengthened its balance sheet, refinancing $310 million of debt and extending maturities by nearly three years to FY30. The REIT has hedged 89% of its debt with interest rate swaps, mitigating exposure to rate volatility. Moody’s reaffirmed the REIT’s Baa1 investment grade rating, reflecting confidence in its financial discipline and risk management.
Outlook and Guidance for FY26
Looking ahead, the REIT has raised its FY26 operating earnings and distribution guidance to 25.5 cents per security, implying a distribution yield of 6.1% based on recent trading prices. Fund Manager Avi Anger highlighted the REIT’s resilience and growth trajectory, emphasizing its low capital expenditure profile due to a high proportion of triple net leases and minimal vacancy risk. This positions Charter Hall Long WALE REIT well as it navigates the next phase of the property valuation cycle.
Bottom Line?
With strategic acquisitions and strong capital management, Charter Hall Long WALE REIT is poised for growth despite market uncertainties.
Questions in the middle?
- How will rising interest rates beyond current hedging levels impact future earnings?
- What is the potential for redevelopment or expansion of newly acquired government-leased assets?
- How might shifts in government tenancy policies affect lease renewals and portfolio stability?
