Thoughts on Charter Hall Long Wale REIT (ASX: CLW) v Charter Hall Retail REIT (ASX: CQR)
Hi can you please suggest which is better for an income investor, with some growth CLW or CQR. In your last report you bought CLW.
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Answer
Hi Tony,
Firstly, let’s look at these two real estate stocks:
Charter Hall Long Wale REIT (ASX: CLW) owns a diversified portfolio of high-quality Australian commercial properties leased to government and blue-chip corporate tenants on very long-term leases — with a WALE (Weighted Average Lease Expiry) of more than 9 years. Its diversified portfolio of office, industrial, agribusiness and social infrastructure assets is leased to high-quality tenants provides it with stable, inflation-linked income with low vacancy risk — although its bond-like income profile can make the stock more sensitive to rising interest rates.
Charter Hall Retail REIT (ASX: CQR) owns a portfolio of convenience-based shopping centres across Australia anchored primarily by Woolworths, Coles and ALDI supermarkets, making it one of the more defensive retail REITs on the ASX. Because supermarkets generate consistent customer traffic regardless of economic conditions, the portfolio delivers stable, largely non-discretionary rental income supported by long leases and CPI-linked rent increases. The main risks are higher interest rates and future lease negotiations with the major supermarket chains, although tenant quality remains among the strongest in Australian retail property.
As you mentioned earlier this month we tweaked our property exposure in the Active Income Portfolio, by selling Centuria Capital (CNI), preferring Charter Hall (CLW) which is more defensive.
We view CLW’s income as more defensive than CQR’s, with less exposure to the consumer – which is why we prefer it. CLW yields ~7.50% vs CQR which is forecast to yield ~6.9% over the coming 12-months – both unfranked, but as the chart shows their comparative performance is fairly close.
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Charter Hall Long Wale REIT (CLW) v Charter Hall Retail REIT (CQR)
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Charter Hall Long Wale REIT (CLW) v Charter Hall Retail REIT (CQR)
