Charter Hall sells 26 New Zealand ECEC centres amidst push to optimise portfolio

by Jason Roberts

May 05, 2020

Charter Hall Social Infrastructure REIT (CQE) has confirmed the sale and settlement of 26 early childhood education and care (ECEC) centres located in New Zealand in a push to optimise the portfolio to best insulate performance in the current challenging operating environment. 

 

The 26 centres were sold for NZD$36.9 million which represented an 8.7 per cent discount to book value. The yield on sale was 6.6 per cent which is 600 bps higher than the NZ portfolio yield disclosed at the half year results released in February 2020. 

 

From a tenure perspective, the centres had a weighted average lease expiry (WALE) of 5.7 years as at 31 March 2020. 

 

It is unclear who the buyer of the properties was at this juncture. 

 

The sale will leave CQE with 20 centres in New Zealand, all of which are leased to Best Start, New Zealand’s largest ECEC provider, and are said to be well located and predominantly purpose built. The combined book value of the properties will be around NZ$36.8 million and their WALE 7.4 years.  

 

Commenting on the transaction Travis Butcher, CQE’s Fund Manager commented: “The sale is a good outcome that reduces CQE’s exposure to the New Zealand market. Despite the current challenging environment, we continue to optimise the portfolio to ensure the best outcome for CQE investors.”

 

As at CQE’s FY 2020 half year results the trust had 296 freehold centres in Australia, 46 (now 20) in New Zealand and 19 lease holds. The combined value of the centres at that point in time was $973.3 million representing a yield of 6.0 per cent. 

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