The Charter Hall Retail REIT (ASX: CQR) unit price fell by 3% to lead the S&P/ASX200 Index (ASX: XJO) losers yesterday after announcing the completion of its $150 million institutional placement.
What did the REIT announce?
The CQR REIT emerged from its trading halt on Tuesday morning after it had requested the pause in trade to make an announcement about a "significant transaction".
On Monday morning, management announced that the REIT had entered into an agreement to acquire a 100% interest in Rockdale Plaza, NSW for a total consideration of $142 million.
In order to fund this acquisition and associated transaction costs, the Charter Hall Retail REIT undertook a fully underwritten $150 million institutional placement at $4.51 per unit, which represented a 3.01% discount to Friday's closing price of $4.65 per unit.
Investors responded accordingly yesterday, with the unit price falling by that exact amount to $4.51 per unit in a reflection of where institutional investors and management see the true value of the REIT.
The REIT also announced it is undertaking a non-underwritten Unit Purchase Plan (UPP) which is expected to raise up to $10 million at the same price of $4.51 per unit.
How has the Charter Hall Retail REIT performed so far this year?
The Charter Hall unit price is up just 1.6% this year and has been particularly volatile throughout the early part of the year.
The REIT currently has a market cap of $1.82 billion and is a sizeable player within the REIT sector, and most importantly yields 5.4% p.a. for investors.
As far as the REITs go, I wouldn't be jumping into the Charter Hall Retail REIT just yet given the building headwinds for Aussie retail and the potential for worsening economic data in the second half of the year.
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 industry by storm.
