The Charter Hall Education Trust (ASX: CQE) remains in a trading halt after the real estate investment trust (REIT) announced the acquisition of 13 early learning centres for a total consideration of $75.5 million.
What did the REIT announce?
The Trust is adding 2 completed centres, 5 centres to be acquired on completion (April 2019 – July 2019) and 6 fund-through development centres (November 2019 – March 2020) to its portfolio. The Trust also said it is in due diligence on a further ~$14 million of acquisitions of centres with a similar profile in what is shaping up as a big year of CapEx for the REIT.
To fund the acquisitions, the Trust is undertaking a fully underwritten $100 million institutional placement of units in the Trust at $3.35 per unit which will also serve to provide balance sheet headroom for the current project pipeline.
The $3.35 per unit offer price represents a 6.2% discount to yesterday's closing price of $3.57 per unit as management tries to shore up funding for its portfolio development.
How has the Education REIT performed so far this year?
The Trust's unit price has surged 18.6% year-to-date which is substantially higher than growth in fellow Charter Hall Group (ASX: CHC) REIT unit prices including Charter Hall Long WALE REIT (ASX: CLW) and Charter Hall Retail REIT (ASX: CQR).
As far as the REITs go, the Charter Hall Education Trust is certainly not the worst pick within the sector, and I like the non-cyclical income protection it can provide due to the nature of its early learning centres as a consumer staple.
I'm wary of the late-cycle asset valuations in the Australian REIT sector, particularly given the number of inter-REIT acquisitions that have been happening over the last 6-18 months.
For those who want more growth than the A-REITs can offer, I'd suggest checking out this buy-rated stock that could be set to take a new-age $22 billion by storm in the mean.
