Charter Hall (ASX:CHC) share price slips despite positive update

The Charter Hall Group (ASX: CHC) share price is backtracking in late morning trade despite announcing a medium-term note issuance.

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The Charter Hall Group (ASX: CHC) share price is backtracking in late morning trade despite announcing a medium-term note issuance. At the time of writing, the property company’s shares are fetching for $13.34, down 1.1%.

What did Charter Hall update the ASX with?

In its announcement, Charter Hall advised it has secured $250 million of debt through the issuance of Australian medium-term notes. The transaction was strongly supported by domestic and international investors. It is expected that the increased liquidity will drive investment opportunities and improve earnings.

The notes were priced at a fixed coupon of 3.1% before being swapped back to a floating exposure. Charter Hall stated that this provides an all-up cost of debt 1.5% annually at the current floating rate.

Furthermore, the notes are expected to settle on 21 April 2021 and have a 10-year maturity.

Charter Hall group chief financial officer, Russell Proutt commented:

This bond issuance is consistent with our strategy to increase liquidity, extend our weighted average debt maturity, which is now 6.9 years, and diversify our sources of debt capital.

This issue increases the volume of debt capital market issuance beyond $4 billion across the Platform’s $19 billion of debt facilities, of which $13 billion net of cash is drawn, providing significant liquidity and investment capacity across the Platform including the balance sheet of CHC.

Charter Hall group managing director and CEO, David Harrison added:

We are pleased to expand our Investment Capacity at a time where we see attractive risk adjusted returns investing in the growth of our funds and partnerships. In particular, we wish to continue investing in our Direct platform of funds which boast average WALE’s of 9 years across the suite of industrial, office and diversified fund portfolios.

Our wholesale partnerships continue to grow and we expect further investment by the Group to accelerate the growth of existing partnerships and new capital partnerships with both domestic and offshore wholesale investors.

Charter Hall share price snapshot

The Charter Hall share price has accelerated to over 70% in the past 12 months but is down 10% year-to-date. The company’s shares reached a high of $15.29 at the end of 2020 and began to tread lower ever since.

Based on valuation grounds, Charter Hall commands a market capitalisation of around $6.1 billion, with 465.7 million shares on issue.

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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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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