Charter Hall Group's unlisted wholesale fund, the Long Wale Hardware Partnership (LWHP) has spent $187 million acquiring a portfolio of six former Masters retail stores subject to new 12 year leases to Bunnings.
The off-market transaction has been secured at a ten per cent discount to independent valuations.
As a result of this transaction, the group across its funds management platform is invested in 41 Bunnings long leased retail hardware stores nationally, valued at over $1.4 billion.
The LWHP is a wholesale partnership with the investment strategy of acquiring a portfolio of long WALE home improvement assets leased to Bunnings and Woolworths across Australia.
"We are proud to further expand our strong relationship with Wesfarmers and Bunnings Group," Charter Hall chief executive David Harrison said.
"The acquisition of this portfolio aligns with the existing LWHP strategy by increasing weighting by both income and value towards well located metropolitan locations and increasing exposure to high quality retail assets with strong tenant covenant customers.”
The enlarged LWHP portfolio will have a WALE of 9.8 years and comprised more than 90 per cent of metropolitan located assets with two regional assets in Cairns and Rockhampton, Queensland.
The acquisition of the portfolio was funded via an additional $90 million equity investment from the LWHP partners, $30 million of which has been invested by Charter Hall Group.
Post the transaction, LWHP will own a portfolio of predominantly Bunnings leased assets totalling $920 million in value, geared at 33.5 per cent, with Charter Hall’s investment representing 13 per cent of total equity invested in LWHP.
LWHP delivered a total property investment return for the period 30 June 2013 to 30 June 2017, outperforming the MSCI/IPD Wholesale Property Fund Index, which returned 10 per cent over the same period.