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Charter Hall taps market for $242m to fund property deals

The half share was set at $165.7 million on a passing yield of 5 per cent.

The equity raised will also partially fund a 15 per cent stake in Telstra’s Melbourne headquarters, a building Charter Hall already owns outright through two other funds which purchased the tower in July for $830 million in an off-market deal with Investa.

The 15 per cent interest – sold for $63.6 million on a passing yield of 4.5 per cent – will be housed in Charter Hall’s Long WALE REIT.

The third property up for grabs is a full interest in a Bunnings warehouse in Palmerston, Darwin, which the fund snapped up for $41.3 million on a 5.7 per cent yield.

The large format Bunnings store, also under construction, will be occupied with a 12-year lease when the hardware giant moves in.

All three assets will sit in the Long WALE REIT fund, a trust set up to target the lengthy “weighted average lease expiries” offered by large corporate tenants.

The money raised from investors will partially cover all three deals which, combined, are worth $270.6 million.

Charter Hall has also stitched up another deal that will see another of its funds – Charter Hall Direct PFA Fund – take ownership of the remaining half share in The Glasshouse, valuing the eight level office with 34,947 square metres of lettable area at $331.4 million.

That deal will be directly funded by PFA and is not part of the equity raising.

The equity raising will be issued at a fixed price of $5.50 per security, a 4 per cent discount to the last close of $5.73 per security on 1 November 2019, Charter Hall said.

“These properties feature long leases to high quality tenants with 83 per cent of income derived from NSW government, Telstra and Bunnings Group Limited,” Avi Anger, the Long WALE REIT’s fund manager said.

Charter Hall has had a active few months stitching up a string of deals.

In August, Telstra offloaded 37 of its major communication exchanges into a $1.43 billion unlisted property trust that it will jointly own with a consortium led by Charter Hall.

Charter Hall’s consortium divided up its 49 per cent, $700 million stake in the trust between the Charter Hall Long WALE REIT with 28.2 per cent, and an unnamed wholesale capital partner and the Charter Hall Group taking the remaining 21.8 per cent.

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