Charter Hall Retail Management Limited in its capacity as responsible entity of Charter Hall Retail REIT (ASX: CQR) requested a trading halt in CQR units as it announced a material acquisition transaction partly funded by an underwritten placement.
The trading halt is expected to be lifted tomorrow, 2 April 2019, from the commencement of trading. CQR last traded at $4.650.
In the market release dated 1 April 2019, the real estate sector company Charter Hall Retail REIT via its responsible entity Charter Hall Retail Management Limited announced that it has entered into an agreement to acquire a 100% interest in Rockdale Plaza, NSW for a total consideration of $142 million.
The company informed that Rockdale Plaza is a major Convenience Plus asset strategically located in the inner suburbs of Sydney, 12km from the CBD with a high profile location on a main arterial road. Further, it is well-known for its strong tenant covenants with the occupancy rate of 99.8% and 4.5 million annual customer visitations as at December 2018. More than half of centre income is driven by anchor tenants Woolworths, Big W, Aldi and 7 mini majors.
To partially fund the acquisition, the company has decided to undertake a fully underwritten $150 million institutional placement at an issue price of $4.51 per unit. The company intends to raise up to $10 million via a unit purchase plan under which Eligible unitholders in Australia and New Zealand would be allowed to participate in the offer and subscribe for up to $15,000 of new units at $4.51 per share, same as in placement.
Charter Hall’s Retail CEO, Greg Chubb said: “The acquisition of Rockdale Plaza offers the REIT a significant opportunity to acquire a convenience-based, high performing centre.”
CQR further reaffirmed its FY2019 guidance to 2% growth in operating earnings. However, it expects its pro-forma gearing to be reduced following the Acquisition and Placement comprising balance sheet gearing now forecasted to be 32.2% and look through gearing forecasted to be 35.1%.
The company stated that new units issued under the Unit Purchase Plan (UPP) will rank equally with current CQR units and will be entitled to the full distribution for the six month ending 30 June 2019.
As part of ongoing capital management initiatives, CQR has extended all existing interest rate swaps and increased near term hedging volumes to capitalise on the low-interest rate environment. This prudent capital management initiative will decrease the REIT’s weighted average hedge rate from 2.1% to 1.7% p.a. The REIT has no debt maturing until Fiscal 2022, having already refinanced $335 million of bank debt due to mature in Fiscal2021.
CQR last traded at a price to earnings multiple of 15.470x with a market capitalisation of $1.88 billion as at 1 April 2019. Over the past 12 months, the stock has gone up by 20.78% including a surge of 3.79% in the past three months.
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