Telstra creates property trust to monetize assets

Telstra has created an unlisted property trust that will own 37 existing exchange properties.

A Charter Hall-led consortium will acquire a 49 percent stake in the new property trust for $700 million, reflecting a capitalisation rate of 4.4 percent and valuing the entire property trust at $1.43 billion. Telstra will retain ownership of a 51 per cent controlling interest in the property trust and retain operational control of the properties.

Telstra describes the exchanges as relatively high-value ones in which it expects to maintain a presence long term. The exchanges represent a significant portion of the value attributable to Telstra exchanges. Telstra will sign long-term triple-net leases with the property trust. The leases will have a weighted average lease expiry of 21 years, with multiple options for lease extension to accommodate ongoing requirements.

Telstra said the announcement reflects continued progress on the fourth pillar of its T22 strategy to monetise up to $2 billion of assets to strengthen its balance sheet.