Charter Hall Long Wale REIT Completes Institutional Entitlement Offer – Stock Takes A Downtrend!

  • Dec 06, 2018 AEDT
  • Team Kalkine
Charter Hall Long Wale REIT Completes Institutional Entitlement Offer – Stock Takes A Downtrend!

On 6 December 2018, Charter Hall Long Wale REIT (ASX: CLW) announced the successful completion of the institutional component of its 1 for 8.1 accelerated non-renounceable entitlement offer which was recently announced on 5 December 2018. Following the release of this news, the share price of the company decreased by 1.65% as on 6 December 2018.

The Institutional Entitlement Offer has raised around $81mn and the retail component of the entitlement offer is expected to raise around $44mn, which will take the total size of the entitlement offer to around $125mn. 

As per the announcement, the new securities issued under the Entitlement Offer will get issued at a fixed price of $4.05 per security. Further, the new securities will rank equally with existing CLW securities which means that they will get full entitlement to the distribution for the December 2018 quarter of 6.5 cps.

On 5 December 2018, the company entered into an agreement in a portfolio of 27 agri-logistics properties, for a total consideration of $207mn, and the proceeds from the Entitlement Offer will be used to partially fund this acquisition.

The Retail Entitlement Offer is going to open on 11 December 2018 and it will close at on 20 December 2018 (AEST 5:00 PM). The eligible security holders will be invited to participate in the Retail Entitlement Offer at the offer price of $4.05 and offer ratio 1 for 8 and they will have the opportunity to apply and pay for their entitlements before 5.00 pm (Sydney time) on 17 December 2018 to have their new securities allotted on the same day as securities issued under the Institutional Entitlement Offer.

The securities of CLW were put on a trading halt on 5 December 2018, pending the release of an announcement regarding the outcome of the Institutional Entitlement offer. However, after today's announcement, the securities started trading on ASX. Due to the impact of the Acquisition and Entitlement Offer, CLW has increased its FY19 Operating EPS guidance range to 26.8 – 26.9 cents per security, representing an increase of 1.3 percent on its previously announced guidance range.

As per the proforma balance sheet of the company, the total assets of the company increased from $1,467.5 million (Pre- transaction) to $1,705.1 million (Post-transaction) which includes $30.6 million from Independent valuations and $207.0 million from Acquisition and Entitlement Offer. Further, the total liabilities of the company increased from $484.7 million (Pre- transaction) to $572.7 (Post- transaction). The gearing ratio also increased from 31.1% to 31.9%.

The company has also informed in its report that in addition to acquiring the assets in connection with this portfolio Acquisition, the company will continue to identify new investment opportunities for potential acquisition. The REIT is planning to conduct all reasonable and appropriate due diligence on potential investment opportunities.

In the last six months, the share price of CLW decreased by 0.70% as on 4 December 2018. CLW’s shares traded at $4.170 with a market capitalization of circa $1.06 billion as on 6 December 2018.


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