Despite concerns about the Australian property market, there’s one Australian real estate investment trust (A-REIT) that has been quietly surging higher in 2019.
The Charter Hall Long WALE REIT (ASX: CLW) hit a new 52-week high of $5.87 at market close yesterday and has rocketed 43% higher since the start of the year.
So, what’s driving shares in this commercial real estate (CRE) REIT higher in 2019 and could there be a buying opportunity?
Why Charter Hall Long Wale REIT shares are surging
Charter Hall Long WALE REIT invests in industrial, office and retail properties which provide shareholders with diversified CRE exposure.
The A-REIT gets it name from its long weighted-average lease expiry (WALE) with its main earnings base being long-term corporate and government tenants.
Charter Hall Long WALE REIT currently holds a $2.13 billion portfolio comprising 118 properties at 99.6% occupancy and a WALE of 12.5 years.
The A-REIT’s share price climbed 1.2% higher in yesterday’s trade despite no specific news, however, it recently announced a significant partnership with Charter Hall Group (ASX: CHC).
In a new managed partnership, Charter Hall will acquire a 49% interest in a portfolio of 37 telco exchange properties leased to Telstra Corporation Ltd (ASX: TLS) with a WALE of 21 years.
Charter Hall Long WALE REIT will be a 50% owner in the $700 million managed partnership as it looks to continue its strong performance in the long WALE sale and leaseback segment.
Should you buy Charter Hall Long WALE REIT shares?
Given the strong share price growth not just in August but throughout the year, I think Charter Hall Long WALE REIT is worth a look in September.
Charter Hall Group itself reported a strong earnings result just last week, and the Long WALE REIT has continued to perform strongly for the group in 2019.
I’m not personally looking for CRE exposure in my portfolio, but I think as long as real estate conditions remain intact and the low-interest-rate environment persists, the A-REIT could be worth a look in place of a high dividend-paying stock.
Other than the A-REITs, this banking stock could be in the buy zone in the second half of the year.
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Motley Fool contributor Kenneth Hall 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.