Why the Charter Hall REIT (ASX:CLW) share price is frozen

The Charter Hall REIT share price is in a trading halt this morning. We look at the company’s latest acquisitions and equity raising.

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The Charter Hall Long WALE REIT (ASX: CLW) share price is in a trading halt this morning.

The real estate investment trust (REIT), managed by Charter Hall Group (ASX: CHC), requested the halt this morning pending several announcements.

We take a look at those below.

Why did CLW request a trading halt?

The Charter Hall Long share price was paused today prior to the company announcing 4 property acquisitions. In addition, Charter Hall Long announced an accelerated capital raising to fund the purchases.

Charter Hall also reported that it has entered into agreements to acquire 50% interests in 3 suburban office assets. All with a long weighted average lease expiry (WALE) and a long WALE convenience retail property.

Furthermore, the total purchase price of the 4 properties is $415.4 million. According to the release, that reflects a passing yield of 5.2%. The combined acquisitions have a WALE of 9.2 years.

The 4 acquisitions are:

  • the Services Australia Building in Tuggeranong, ACT for $153.0 million
  • the Australian Taxation Office (ATO) Building in Box Hill, VIC for $115.0 million
  • the Red Cross Building in Alexandria, NSW for $79.5 million
  • the ATO Building in Albury, NSW for $42.5 million.

The company also reported it has settled the acquisition of a 100% interest in an Ampol-anchored convenience retail property in Queensland for $25.4 million.

The new acquisitions will be partly funded by a roughly $250 million fully underwritten accelerated non-renounceable entitlement offer.

New shares will be issued at $4.65. That’s 3.4% below yesterday’s closing price of $4.81 per share. Charter Hall Group has also committed to taking up its full entitlement of approximately $29 million.

Management commentary

Commenting on the acquisitions, Avi Anger, fund manager of CLW said:

The acquisitions of these modern, long WALE properties reinforces the REIT’s strategy of acquiring high quality properties with long leases to strong tenant covenants. The properties are diversified across the Eastern Seaboard and support the provision of essential government, life sciences and convenience retail services.

The acquisitions are 75% leased by income to the Commonwealth Government and will increase CLW’s exposure to government tenants from 16% to 21%. The acquisitions weighted average rent review of 3.6% is accretive to CLW’s portfolio weighted average rent review and supports the REIT’s secure and growing income profile.

Charter Hall share price snapshot

The Charter Hall share price is up 20% over the past 12 months, lagging the 29% gains posted by the S&P/ASX 200 Index (ASX: XJO). Furthermore, year-to-date, the REIT’s shares have gained 3%.

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Motley Fool contributor Bernd Struben 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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