I think Charter Hall Long WALE REIT (ASX: CLW) could be one of the best REIT dividend shares after more acquisitions and an upgrade.
CLW’s acquisitions
It has announced that it has entered into agreements to acquire stakes in three properties for a total purchase price of approximately $267 million.
It’s buying a 33.3% stake (tenants in common title interest) in the Myer Bourke Street Mall property in the Melbourne CBD. The next purchase is a 100% interest in a distribution centre leased to Simon National Carriers in Brisbane for $83.1 million. The final acquisition is a 100% interest in a Bunnings property in Baldivis, Perth, for $49 million.
These acquisitions have a passing yield of 5.1% and a weighted average lease expiry (WALE) of 11.2 years with favourable rent review structures.
This deal is going to be funded by existing debt, including the proceeds of the recently completed $200 million notes issue.
Upgraded guidance
Charter Hall Long WALE REIT is still expecting FY21 operating earnings per security (EPS) to be 29.2 cents, representing growth of 3.2%.
But it also upgraded its FY22 operating EPS guidance of growth to be no less than 4.5%.
Management comments
Avi Anger, fund manager of Charter Hall Long WALE REIT, said:
“The acquisitions are strategically located, high quality industrial and logistics and long WALE retail properties that are leased to national tenants. This includes the Myer Bourke Street Mall property in Melbourne, which together with CLW’s existing investment in the David Jones Castlereagh Street store in Sydney, represent two of Australia’s most iconic CBD buildings.”
Why CLW is such a strong REIT ASX dividend share
It’s an attractive idea in my opinion because it has a diversified portfolio, all underpinned by long rental contracts.
After including these acquisitions, the occupancy rate will be 97.8%, the WALE is 13.2 years and the weighted average rental review (WARR) would be 2.3%. Those are solid statistics and can lead to steady growth of profit per share and the distribution.
Based on the FY22 forecast distribution, the forward yield is expected to be 6.4% at the pre-open price. That’s pretty solid in my opinion.
There are other ASX dividend shares that could be opportunities for income.
