Charter Hall Long WALE REIT: A Resilient Portfolio Drives Strong Earnings Recovery

Charter Hall Long WALE REIT (ASX:CLW) has reported a significant turnaround in earnings for the first half of 2025, with operating earnings of $89.8 million, or 12.5 cents per security, compared to a loss of $0.36 in the same period last year. This strong performance is a testament to the REIT's strategic asset management and portfolio curation strategies. Here's a closer look at the key factors contributing to CLW's earnings recovery:

1. Portfolio Curation and Strategic Asset Sales: CLW successfully divested non-core assets, reducing near-term lease expiry risk and strengthening its balance sheet. The REIT completed a total of $289 million of net property divestments, including the sale of the Inghams portfolio ($225.3 million), Australian Red Cross, Sydney ($74.0 million), and bp Australia Armadale Service Centre ($1.1 million). These divestments allowed CLW to focus on its core portfolio and improve its financial position.
2. Acquisitions of Long WALE, Hospitality Assets: CLW acquired two Endeavour Group leased, long WALE, hospitality assets for a total of $11.5 million. These acquisitions were strategic in nature, consolidating adjoining sites to existing assets owned in the REIT's convenience retail hospitality portfolio. This move helped to increase the portfolio's WALE and occupancy rate, which in turn enhanced earnings.
3. Major Lease Expansion: CLW executed agreements with Coles for an expansion and lease extension at its Perth Airport Distribution Centre, WA. This expansion is expected to have a positive impact on the REIT's earnings, as it will increase the property's income and extend the lease term.
4. Operational Efficiency and Cost Control: CLW achieved a 17.5% reduction in operating expenses and a 15.6% reduction in finance costs, primarily due to divestment activities. This cost control helped improve the REIT's earnings performance.
5. Successful Security Buy-Back Program: CLW completed a $50 million on-market security buy-back program. This program helped the REIT reduce its outstanding securities, which in turn reduced its gearing ratio and improved its financial position.



CLW's portfolio composition and asset management strategies have played a significant role in its improved earnings performance. The REIT's diversified portfolio, with a mix of asset classes, and long WALE strategy have contributed to a stable occupancy rate of 99.8% and a 3.5% like-for-like Net Property Income (NPI) growth. Additionally, the REIT's strategic divestments and acquisitions, along with major lease expansions, have further enhanced its financial position and earnings.

In conclusion, Charter Hall Long WALE REIT's strong earnings recovery in the first half of 2025 is a result of its strategic asset management, portfolio curation, and cost control measures. The REIT's diversified portfolio and long WALE strategy have contributed to its resilience and ability to navigate economic challenges. As the REIT continues to focus on curating resilient and diversified portfolios and working closely with its tenant and capital partners, investors can expect CLW to maintain its strong earnings performance and provide attractive returns.