The Charter Hall Social Infrastructure REIT (ASX: CQE) share price will be one to watch on Tuesday.
This follows the release of a very positive update after the market close on Monday.
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What did it announce?
This afternoon the Charter Hall Social Infrastructure REIT announced that it has signed new ultra-long leases with its major tenant, Goodstart Early Learning.
According to the release, the two parties have agreed mutually beneficial terms including fixed annual increases for a further 48 properties.
Prior to the new leases, these properties had a weighted average lease expiry (WALE) of 5.5 years. As a result of this transaction and other portfolio activities during the second half, the company expects to end the period with a WALE of approximately 15 years.
This compares to its WALE of 14 years at the end of the first half and provides the company with great visibility on its future earnings.
Property valuations
The Charter Hall Social Infrastructure REIT also provided the market with an update on its property valuations.
During the second half, the company had 211 childcare properties, or 61% of the childcare portfolio by gross asset value, independently valued. This includes the 48 properties subject to new leases with Goodstart.
The valuations resulted in a $81 million or 12.3% uplift on the prior book values, with the passing yield on these properties firming by 56 bps to 5.7%.
In addition to this, the company revealed that its 50% interest in the Brisbane Bus Depot was independently revalued to $61.12 million. This reflects a passing yield of 4.5% and an uplift of $6.1 million or 11.1% on the prior book value.
Distributions
In light of its strong form, the company has declared a fourth quarter distribution of 4.1 cents per unit. This brings its full year distribution to 15.7 cents per unit which, based on the current Charter Hall Social Infrastructure REIT share price of $3.46, represents a 4.5% yield.
But it won't stop there. Due to the portfolio curation activity undertaken during the year and resultant capital gains, the company has declared a special distribution of 4 cents per unit. This brings its quarterly distribution to 8.1 cents per unit and full year distribution to 19.7 cents per unit.
