Telstra reaches $1 billion in asset monetisation after Charter Hall deal

The Telstra Corporation Ltd (ASX:TLS) share price could be on the move today after revealing that it has reached $1 billion in asset monetisation…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch this morning after revealing that its asset monetisation has reached $1 billion.

What did Telstra announce?

This morning Telstra announced the establishment and part sale of an unlisted property trust that will own 37 of its existing exchange properties.

According to the release, as part of the transaction, a consortium led by Charter Hall Group (ASX: CHC) will acquire a 49% stake in the new trust for $700 million. This reflects a capitalisation rate of 4.4% and values the entire property trust at $1.43 billion.

Telstra will retain ownership of a 51% controlling interest in the property trust and retain operational control of the properties. It intends to sign long-term triple-net lease arrangements with the property trust, providing it with a stable flow of payments.

These leases will have a weighted average lease expiry of 21 years, with multiple options for lease extension to accommodate the business' ongoing requirements

Telstra's CEO, Andrew Penn, believes the agreement demonstrates further progress in relation to the fourth pillar of its T22 strategy – monetising up to $2 billion of assets to strengthen its balance sheet.

He said: "When we announced our T22 strategy in June 2018 it included the goal of monetising up to $2 billion of assets to strengthen our balance sheet. Since then we have been working to unlock the true value of some of our assets and today's agreement, when completed, will take us to around the $1 billion mark."

This follows an agreement announced on Thursday to sell part of its portfolio of data centres in Europe and Asia to global private equity firm I-Squared Capital, owners of HGC Global Communications.

That agreement remains subject to a number of conditions precedent, but if these are satisfied Telstra expects the transaction to be completed in first half of FY 2020. The estimated proceeds from the sale are approximately $160 million, which are included in the $1 billion figure mentioned by Mr Penn.

Charter Hall's managing director and Group CEO, David Harrison, said: "The creation of this Partnership continues Charter Hall's successful growth of new partnerships and funds, whilst further extending the Group's long WALE investment strategy. It also continues the strong relationship we have with Telstra, one of our significant tenant-customers and demonstrates Charter Hall's leading position in the sale and leaseback market in Australia."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

3 small-cap ASX healthcare shares 'with strong prospects'

Fund manager IML discusses why these 3 ASX healthcare shares are likely to rise in value.

Read more »

Magnifying glass on a rising interest rate graph.
Share Market News

Will the RBA finally cut interest rates next week?

Let's see what economists are saying about the central bank's meeting.

Read more »

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors endured a rough Friday to close the trading week today.

Read more »

a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.
Broker Notes

7 ASX All Ords shares elevated to 'strong buy' status in October

The brokers turned bullish on these ASX companies last month.

Read more »

A businessman compares the growth trajectory of property versus shares.
Share Market News

How ASX shares vs. property performed in October

The national home value rose for the 21st consecutive month while the ASX 200 dipped.

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
52-Week Lows

Why is the Woolworths share price at its lowest point since 2020?

We haven't seen Woolies shares this low since COVID.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »