Lending Association

Charter Hall Long WALE REIT faces asset sales

In August, Charter Hall Long WALE REIT indicated its intention to sell assets to manage gearing after suffering significant write-downs and asset devaluations, leading to a loss of $189 million for the 2022-23 financial year.

The driver behind this loss was a $362.7 million downward revaluation of its $6.8 billion portfolio, including office buildings, warehouses, social infrastructure, agricultural assets, and retail outlets like pubs and petrol stations, revealed during the annual results last August.

During the recent interim results for the 2023-24 financial year, the company reported another loss and emphasized the need for further asset sales, aiming to offload over $500 million worth of commercial property to reduce its debt burden and appease its lenders.

Although the trust has already sold assets worth $145.82 million, there’s still nearly $400 million to go to achieve a sustainable level of gearing. Additionally, property write-downs totaling over $306 million, coupled with a $42 million loss on financial derivatives, resulted in a statutory loss of $258.4 million for the 2024 interim earnings period.

Distribution was trimmed to 13 cents a security, reflecting a 7.1% dip in net earnings to just over $93 million. Combined losses for the 18 months to December amounted to $457 million, primarily due to significant write-downs totaling $668 million.

Despite these challenges, the trust maintained its guidance of a 7.1% decrease in earnings and distribution of 26 cents a security for the year ending June. This is a decrease from the distribution and operating earnings of 28 cents a security in 2022-23.

The trust’s net tangible assets stood at $5.14 a security at the end of December, down from $5.63 at the end of June, with securities trading around 3% higher at $3.87, representing nearly a 25% discount to the NTA figure.