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Why Are Charter Hall REIT Shares In A Trading Halt?

The Charter Hall Long WALE REIT (ASX: CLW), owned by Charter Hall Group Ltd (ASX: CHC), has announced three new acquisitions and an equity raising of $180 million, placing shares in a trading halt.

The Charter Hall Long WALE REIT (ASX: CLW), owned by Charter Hall Group Ltd (ASX: CHC), has announced three new acquisitions and an equity raising of $180 million, placing shares in a trading halt.

About Charter Hall

Charter Hall is one of Australia’s leading property groups, with more than $28.4 billion of leased property in the office, retail, industrial and social infrastructure sectors.

Charter Hall Long WALE REIT (CLW) is one of the many real estate investment trusts that they operate. CLW consists of 114 properties with a total valuation of approximately $1.9 billion. The “WALE” part of the name refers to the weighted average lease expiry, which is 12.6 years for this portfolio.

Three New Acquisitions

CLW has entered agreements to acquire:

  • 50% of Brisbane City Council Bus Network Terminal, Eagle Farm, for $51.3 million
    • Yield of 5% and a remaining lease term of 19.2 years
  • 100% of Thales Australian Head Office, Sydney Olympic Park, for $46.2 million
    • Yield of 5.4% and a remaining lease term of 11.9 years
  • 100% of Telstra Canberra Head Office for $108.5 million
    • Yield of 6.9% and a remaining lease term of 6.6 years

The total consideration for the three properties is $206 million, and the weighted average initial passing yield is 6.1%.

Equity Raising

CLW will conduct a fully underwritten institutional placement to raise $180 million. The securities will be issued at a fixed price of $4.74 per security, representing a 3.9% discount to the last close price.

A security purchase plan (SPP) is expected to raise up to a further $10 million. The SPP will allow eligible shareholders to purchase up to $15,000 of new securities at an offer price of $4.669 per security.

Impact And Guidance

Following the three acquisitions and equity raising, FY19 operating EPS is expected to be 26.9 cents per security, which sits at the upper end of previous guidance. CLW also gave guidance for FY20 operating EPS growth of no less than 3.75%.

Securities will remain in a trading halt until tomorrow.

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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.

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