Charter Hall Long WALE REIT (ASX:CLW) outlined first-half FY26 operating earnings growth, portfolio revaluations and recent transaction activity during its 2026 half-year results presentation, while reaffirming full-year guidance for earnings and distributions.
Half-year performance and guidance
Diversified CEO Avi Anger said the REIT delivered operating earnings of AUD 0.1275 per security for the half, representing 2% growth on the prior corresponding period. Distribution per security for the half was also AUD 0.1275, which management said was in line with guidance.
Anger reaffirmed FY26 guidance for operating earnings and distributions of AUD 0.255 per security, which the REIT said reflects 2% growth over FY25. Management also cited a forecast 6.8% distribution yield for FY26 based on the prior day’s closing security price.
Valuations, occupancy and portfolio metrics
Anger said occupancy remained at 99.9% and the REIT’s weighted average lease expiry (WALE) was 9.2 years. The portfolio was described as a diversified AUD 6 billion real estate portfolio with long leases to “blue-chip” tenants.
During the half, 86% of the portfolio was independently valued, delivering a AUD 139 million net valuation uplift. Erin Kent, Head of Long WALE REIT Finance, said the NTA increase since June was driven by those positive revaluations, partly offset by fair value movements in debt and derivatives.
At 31 December, the REIT held 515 properties, with an average cap rate of 5.4%. Management highlighted that 49% of income is derived from triple-net leases, where tenants bear outgoings, maintenance and capital expenditure. Weighted average annual rent reviews were stated as 3.1%.
Transactions: acquisitions, divestments and portfolio curation
Management said the REIT completed AUD 376 million of net transactions during the half, comprising AUD 455 million of acquisitions and AUD 79 million of divestments.
- Coles Truganina development: CLW acquired a 49.9% interest in an automated distribution centre under construction in Truganina in Melbourne’s west. The facility is 100% pre-leased to Coles for an initial 20-year term. Construction is expected to complete in 2027, with a forecast on-completion value of AUD 440 million, and CLW’s share at AUD 219.6 million. Kent later said CLW had contributed about half of its share to date and would fund the balance over the next 18–24 months.
- Long WALE Office Partnership: CLW acquired a AUD 17.6 million equity interest in a new partnership holding interests in five modern prime CBD office buildings. Management said the portfolio was 98% occupied, had an 18-year portfolio WALE at acquisition, and included average fixed annual rent reviews of 3.8%. In Q&A, Anger said the largest weightings were exposures to 52 Martin Place (a 30-year WALE to the New South Wales government) and 140 Lonsdale (a 27-year WALE to the Australian Federal Police), describing these as the bulk of the portfolio.
On divestments, Anger said CLW sold its interest in an existing Coles distribution centre in Truganina and reinvested proceeds into the new development, describing the switch as WALE-enhancing by converting a 6.6-year WALE into a 20-year WALE from completion. In Q&A, he clarified that the sale price reflected the property’s most recent valuation at the time of the transaction, noting the earlier June value had become “stale,” and that valuation was impacted as WALE shortened and cap rates moved.
Anger also said two non-core BP portfolio properties were sold following BP’s recommendation, and that CLW sold the Brunswick Hotel from its ALE portfolio after receiving an unsolicited offer, stating the asset sold at a 75% premium to purchase price and a 10% premium to December book value.
Funding, hedging and leverage
Kent said finance costs increased 13.6% due to higher average debt drawn to fund transaction activity and a higher weighted average cost of debt.
During the half, CLW completed about AUD 700 million of debt refinancing initiatives. This included AUD 270 million of new five-year facilities established on the balance sheet with all-in margins 5–10 basis points lower than existing bank facilities, and AUD 430 million of refinanced secured debt within joint ventures, including a new AUD 375 million secured facility in the ALE joint venture that was previously unlevered. In Q&A, Kent said about AUD 340 million (CLW’s 50% share) was released back to the balance sheet from that ALE facility.
As of 31 December, balance sheet gearing was 29.8% (within the REIT’s 25%–35% target range), while look-through gearing was 41%. Anger said the balance sheet metric remained the primary target, while look-through gearing was provided because covenants are pegged to it; he later said the look-through covenant was 50 and management believed it had sufficient headroom.
CLW’s weighted average debt maturity was 3.4 years. Kent said the weighted average cost of debt at 31 December was 4.4% based on look-through debt drawn of AUD 2.5 billion, with look-through hedging of AUD 1.8 billion at an average fixed rate of 2.6%. The REIT completed AUD 1.1 billion of new hedges, resulting in forecast hedging coverage of 80% across the second half of FY26 and an average of 71% during FY27. In Q&A, Kent said swap execution costs were “minimal” and “immaterial” in the period.
Moody’s reaffirmed CLW’s Baa1 investment-grade credit rating in December 2025. Management also disclosed an interest coverage ratio of about 2.9 times as at 31 December.
Leasing, tenant discussions and portfolio themes
Anger said the REIT had minimal leases expiring in the near term and was in discussions with several tenants regarding renewals and extensions. He also highlighted that if tenants exercised all option periods on triple-net leases, portfolio WALE would extend to 30 years from today.
During Q&A, Anger provided an update on the Telstra Canberra asset, stating Telstra was vacating but that CLW had secured a six-month extension over part of the building. He said the tenant would start vacating part of the building in the next month or two, with the balance at the end of the year, and that the REIT was engaging both private and government tenant prospects.
On the ALE portfolio, Anger said the trust had previously indicated it was around 30% under-rented at the time of acquisition. He said management believed the under-rent had improved since acquisition but would not provide a current estimate because it would form part of the November 2028 market review negotiations with Endeavour Group. He added there was no active dialogue to bring forward negotiations, but the REIT was open to discussions if they arose.
Asked about buybacks in the context of the security price trading at a discount to NTA, Anger said there was no intention to conduct a buyback at this point, and emphasized execution against earnings and earnings growth as the path to closing the gap.
About Charter Hall Long WALE REIT (ASX:CLW)
Charter Hall Long WALE REIT is an Australian Real Estate Investment Trust (REIT) listed on the ASX and investing in high quality Australasian real estate assets that are predominantly leased to corporate and government tenants on long term leases. Charter Hall Long WALE REIT is managed by Charter Hall Group (ASX: CHC). Charter Hall is one of Australia's leading fully integrated property investment and funds management groups. We use our expertise to access, deploy, manage and invest equity to create value and generate superior returns for our investor customers.
