ASX Release for CLW

Acquisition overview

The Acquisition is a 100% interest in a portfolio of 27 agri-logistics properties, including hatcheries, feedmills and breeder farms. The total consideration of $207 million reflects a 7.35% weighted average capitalisation rate. Key highlights of the Acquisition include:

• 100% leased to a subsidiary of Inghams Group Ltd., a S&P/ASX 200 company and the largest poultry producer in Australia with revenue of over $2 billion in FY18;
• strategic assets to Inghams' Australian business, representing the majority of its long-term supply chain infrastructure for raw materials;
• large land holdings giving Inghams the flexibility to expand production capacity on existing sites to meet the growing demand for poultry products in Australia;
• triple net lease structure with a remaining term of 15.8 years; and
• geographically diversified across all Australian states, with 62% of properties by value located on the Eastern Seaboard.

Portfolio impact¹

Entitlement Offer

The REIT will undertake a fully underwritten accelerated non-renounceable entitlement offer to raise approximately $125 million to fund the Acquisition and associated transaction costs. The Entitlement Offer is fully underwritten by UBS AG, Australia Branch.

Eligible securityholders will be offered 1 new security in the REIT for 8.1 existing securities at a fixed issue price of $4.05 per security (Issue Price), which represents a:

• 4.5% discount to the last close price of $4.24 on 4 December 2018
• 4.0% discount to the theoretical ex-rights price of $4.22
• 6.6% FY19 forecast Operating EPS yield

Securities issued under the Entitlement Offer will rank equally with existing CLW securities and will be entitled to the distribution for the three months to 31 December 2018 of 6.5 cents per security.

Eligible retail securityholders who take up their entitlement in full may also apply for additional new securities in excess of their entitlement (to the extent other eligible retail securityholders do not take up their full Entitlement) up to 50% of their full entitlement.⁴

Intentions of major securityholder

Charter Hall Group is the REIT's largest securityholder with approximately 19% of securities on issue and has committed to take up its full entitlements under the Entitlement Offer, representing a commitment of approximately $24 million.

Financial impact of the Acquisition and Entitlement Offer

Including the impact of the Entitlement Offer and barring any unforeseen events and no material change in market conditions, CLW is pleased to increase its FY19 Operating EPS guidance range to 26.8  – 26.9 cents per security, representing an increase of 1.3% on its previously stated guidance range⁵.

Following the Acquisition and the Entitlement Offer, the REIT's pro-forma⁶:

• balance sheet gearing is forecast to be 31.9%, within CLW's target range of 25 – 35%; and
• look through gearing is forecast to be 37.9%.

Timetable

All dates and times are indicative only and subject to change. Unless otherwise specified, all times and dates refer to AEDT.

<View PDF version of ASX Release> 

<View ASX Market Announcement>

<View CLW Portfolio Aquisition and Equity Presentation>

<View Charter Hall Long WALE REIT (ASX Code CLW) Accelerated nonrenounceable entitlement offer> 

<View Appendix 3B>

_{1 Metrics are as June 2018, pro forma adjusted for transactions completed post balance date.}

_{2 Per pro forma metrics reported in Appendix A of the equity raising investor presentation released to the market on 17 October 2018, adjusted for December property revaluations of $30.6 million}

_{3 Annual rent reviews are the lesser of 2x CPI and 2.5%.}

_{4 In the event of oversubscriptions, the allocation of additional new securities will be subject to scale back on a pro-rata basis. There is no guarantee that you will be allocated any additional new securities.}

_{5 Percentage increase calculated on the mid-point of the guidance range compared to the mid-point of the previous guidance range of 26.4–26.6 cents per security.}

_{6 As at 30 June 2018, adjusted for various transactions outlined in Appendix A of the equity raising presentation released to the market on 5 December 2018.}