Charter Hall Group (ASX: CHC) has announced a partnership to acquire 100% of the freehold interest in the Global HQ of Telstra Corporation Ltd (ASX: TLS) for a total consideration of $830 million.
About Charter Hall
Charter Hall is one of Australia’s leading property groups, with more than $28.4 billion of leased property in the office, retail, industrial and social infrastructure sectors.
They currently operate three ASX-listed real estate investment trusts (REITs) as well as a number of unlisted property funds.
New Partnership
To make this new acquisition, Charter Hall Group will team up with the Charter Hall Prime Office Fund, one of their unlisted funds, and the Public Sector Pension Investment Board (PSP Investments), which is one of Canada’s largest pension investment managers.
The Telstra HQ is based in Melbourne’s CBD and is a 47-storey office tower. 99.6% of the net leasable area (NLA) is leased to Telstra and the weighted average lease expiry (WALE) is 11.9 years.
The current lease includes annual fixed rental reviews of 3.5%, meaning the rent is currently increasing faster than inflation.
Charter Hall Group Managing Director and CEO David Harrison said the transaction highlights Charter Hall’s ability to fund large, institutional-quality investments.
“This off-market transaction which settles in the 1HFY20, reflects the deep relationship we have across our platform with both investor and tenant customers, with capacity to fund major transactions in the Australian market,” he said.
“We have a strong track record of creating institutional quality investment opportunities that deliver long-term sustainable income for our investors.”
Is Charter Hall A Buy?
Charter Hall shares have performed very well so far this year, up nearly 60% year-to-date. While there are concerns about the property market, it seems Charter Hall shares could still be a viable option for growth.
For dividends, one of their ASX-listed REITs might be a better option, like the Charter Hall Retail REIT (ASX: CQR) which currently offers a 6.32% dividend yield.
Otherwise, the free report below has a few more options for dividends.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
