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Charter Hall Social Infrastructure REIT (ASX:CQE) announces acquisition

A happy businessman pointing up, inidicating a rise in share price
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The Charter Hall Social Infrastructure REIT (ASX: CQE) share price has moved 1.79% higher today following an acquisition announcement.

Within the first few minutes of market open, the Charter Hall share price reached as high as $2.89. It has since retreated, and is trading at $2.84 at the time of writing.

What does Charter Hall do?

Charter Hall Social Infrastructure REIT is the largest Australian ASX-listed real estate investment trust that invests in social infrastructure properties.

Managed by the Charter Hall Group (ASX: CHC), the property fund is a part of a $41.8 billion empire that oversees 1,300 properties.

Mater acquisition

Charter Hall advised it will buy a 100% freehold interest in 14 Stratton Street, Newstead in Brisbane, Queensland. The property fund will conduct the sale and leaseback transaction with Mater Misericordiae Limited.

The $122.5 million purchase will be developed into an 11-storey building that will become Mater’s new corporate headquarters. The location is in close proximity to Mater’s existing hospital and training campus in South Brisbane.

The agreement by both parties will see Mater commit to a 10-year lease with two 5-year options. The leaseback will equate to a yield of 4.84%, with fixed annual rental increases of 3.0%.

Charter Hall said the building was currently under construction with settlement to occur around the June 2021 quarter. The property fund said it would use its available investment capacity. That would increase net gearing to approximately 25% and have minimal positive impact on its FY21 operating earnings as a result.

Charter Hall Group CEO David Harrison said:

We are excited about establishing a relationship with Mater as a major tenant customer within our growing Social Infrastructure portfolio, further reinforcing our commitment to grow our reach with major providers of Social Infrastructure services.

We have invested in this near Brisbane CBD location for a decade having developed the $230 million headquarters for Aurizon at 900 Ann Street, Fortitude Valley and the $240 million Bank of Queensland anchored office project at Newstead nearby.

Charter Hall share price summary

The Charter Hall share price has risen 89% since falling to its 52-week low of $1.49 in March. Although materially higher of late, the Charter Hall share price is down almost 12% since the start of the calendar year and 25% from its all-time high achieved in February.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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