Charter Hall – for its Long WALE REIT (CLW) and a trust managed for Hostplus – has entered a Scheme Implementation Deed to acquire all stapled securities within pub investor ALE Property Group (LEP).
Each fund will hold a 50 per cent stake.
The deal is worth approximately $1.68 billion.
“The transaction represents a rare opportunity to acquire a large scale, materially under-rented portfolio of 78 high quality long WALE hospitality/retail assets,” Charter Hall said.
“CLW is undertaking the transaction alongside Hostplus, its existing capital partner in the Long WALE Investment Partnership portfolio of 62 Endeavour Group leased assets,” it added.
Properties cover 91.5 hectares
As part of the proposed acquisition, Charter Hall is offering shareholders $5.68 per unit, comprising $3.67 cash and 0.408 CLW securities per LEP security.
LEP investors will also receive a 55c distribution for the September quarter.
Ninety nine per cent of the assets are located in metropolitan areas; 94pc are on the east coast – including Melbourne’s Young & Jackson (story continues below).
All up, the venues cover 91.5 hectares and contain 226,068 square metres of improvements.
The low site coverage of the structures (25pc), Charter Hall said, allows it to consider adding mixed and alternate use product in the long term.
The current portfolio income of $57.7m, the manager added, is 37pc below market rate ($78.8m).
Newly listed Endeavour Property Group is LEP’s major tenant.
“We believe the transaction is attractive and designed to deliver significant benefit to both LEP and CLW securityholders,” CLW fund manager Avi Anger said.
“The transaction is consistent with CLW’s strategy to invest in high quality real estate assets that are predominantly leased to corporate and government tenants on long term leases,” he added.
Following settlement, CLW will cement it place as Australia’s biggest, diversified long WALE REIT with a pro forma market capitalisation of c$3.8b.
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