Charter Hall Long Wale REIT went into trading halt ahead of pending outcome of $60 million Placement

  • Oct 17, 2018 AEDT
  • Team Kalkine
Charter Hall Long Wale REIT went into trading halt ahead of pending outcome of $60 million Placement

The securities of Charter Hall Long Wale REIT (ASX: CLW) went into a trading halt today.

In an application dated 17 October 2018 Charter Hall WALE Limited, the responsible entity of Charter Hall Direct Industrial and LWR Finance Trust (together CLW), requested Australian Securities Exchange to place trading halt in CLW securities as capital raising through placement underway in support of $117.8 million acquisition.

After voluntarily ceasing the trade in CLW securities, Charter Hall WALE Limited released information about capital raising and the acquisition that it has to be raised for.

The REIT has reportedly inked an agreement to acquire 100% interest in an industrial asset National Archives, Sydney, and 50% of A-grade office asset Optima Centre located in Perth. The total consideration for the acquisitions is $117.8 million reflecting a weighted average 6.9% initial passing yield.

The 100% ownership of National Archives has been bought at $54.1 million with a yield of 6.6% while 50% interest in Optima Centre has come at a cost of $62.6 million, representing a yield of 7.1%. 

In order to partially fund support the acquisition the REIT intends to raise $60 million from institutional placement and up to $20 million from Security Purchase Plan.

In a statement, CLW told that it undertakes a fully underwritten institutional placement to raise approximately $60 million at an issue price of $4.04 per security. This reflects a discount of 2.9% to the last close of $4.16 on 16 October 2018. Further, it revealed that UBS AG, Australia Branch is acting as an underwriter to the Placement.

Whereas, under Security Purchase Plan (SPP) the REIT intends to invite eligible Australia and New Zealand-based shareholders to subscribe for up to $15,000 of new securities at the issue price of $4.04 per security. However, the issue is not underwritten and is capped to $20 million. As per the report, the SPP offer will open on 24 October 2018 and will close on 14 November 2018.

The acquisition for which these funds are to be raised, features fully occupied properties with a combined Weighted Average Lease Expiry (WALE) of 15.3 years. The 89% of its rental income is derived from Government tenants including Government of Western Australia, lessee of Optima Centre, with a lease term remaining of 13.7 years.

Looking forward into FY19, CLW expects operating earning per share (EPS) of between 26.4 – 26.6 cents per security. The guidance has been drawn after considering the impact of acquisition and placement.

Australian Securities Exchange informed that the ongoing trading halt in CLW securities is expected to remain in place until the earlier of 19 October 2018 or the release of market announcement in relation to Placement results.

CLW last traded at $4.040 after falling 0.98% yesterday. The stock has seen a performance change of -3.25% over the past one year. It last traded at a PE of 10.720 x with market capitalization of $938.49 million.

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