Charter Hall Group has created a new wholesale partnership with HOSTPLUS to acquire a $603 million portfolio of properties from ALH Group, subject to initial lease terms of 20 years plus options, reflecting an initial yield of 6.8 per cent.
The triple net lease structure and uncapped annual Australian CPI rental increases from the leading retail liquor and pub operator, provides an attractive investment proposition to both Charter Hall and its investment partner, the $15 billion Australian superannuation fund HOSTPLUS.
The new Charter Hall managed partnership, to be known as the Long WALE Investment Partnership (LWIP), has committed equity of $302 million which, together with a $340 million non recourse debt facility from a syndicate of two Australian banks, will fund the $603 million acquisition due to be completed next month.
Charter Hall and HOSTPLUS have each committed to an initial $151 million equity investment to LWIP.
The ALH portfolio comprises 54 hospitality assets, 46 of which also include a Dan Murphy’s and/or BWS retail tenancy.
The portfolio has an initial lease term of 20 years, with Charter Hall estimating approximately 26 per cent of the net rent is derived from the Woolworths owned retail liquor businesses, Dan Murphy’s and BWS.
ALH is the market leader in the pub sector with 329 venues throughout Australia and is owned 75 per cent by Woolworths Limited and 25 per cent by the Mathieson Group.
“Charter Hall’s entry into the hospitality sector and the growth of its retail portfolio through the Dan Murphy’s and BWS retail liquor assets, provides the Group with exposure to a high quality CPI hedged resilient rental income cash flow, generated from a high calibre tenant that leads both the retail liquor and pub hospitality sectors,” said Charter Hall Joint Managing Director David Harrison.
“We are pleased to have established a new partnership for this acquisition and look forward to working with HOSTPLUS as an investment partner and ALH and Dan Murphy’s as tenant customers that lead this sector.”
The acquisition will be funded from available cash and undrawn debt capacity.
“HOSTPLUS is delighted to partner with Charter Hall and strengthen its position as a major participant in the Australian hospitality sector. ALH’s position as a leading hospitality operator, combined with the long dated CPI linked triple net lease structure, provides attractive investment attributes that align with our primary objective of delivering stable returns to our members,” said HOSTPLUS CEO David Elia.