Charter Hall WALE Limited as responsible entity of the Charter Hall Long WALE REIT (ASX:CLW) (CLW or the REIT) today announced that:
- the REIT has entered into agreements to acquire two office properties and has recently announced the acquisition of a 50% interest in a long leased prime industrial property for a total consideration of $206 million (Acquisitions)
- the REIT will undertake a fully underwritten $180 million institutional placement (Placement) at an issue price of $4.74 per security (Issue Price) to partially fund the Acquisitions and associated transaction costs
- the REIT is also undertaking a non-underwritten Security Purchase Plan (SPP) to eligible securityholders in Australia and New Zealand to raise up to $10 million1
- Including the impact of the Acquisitions and Placement, CLW is pleased to confirm its FY19 Operating EPS guidance of 26.9 cents per security, at the upper end of previous guidance, and provide FY20 Operating EPS growth guidance of no less than 3.75%
The REIT has entered into agreements for the following acquisitions:
- 50% of Brisbane City Council Bus Network Terminal, Eagle Farm, QLD for $51.3 million, representing a yield of 5.0%. The property is underpinned by a triple net lease to Brisbane City Council with a remaining lease term of 19.2 years at the time of
- 100% of Thales Australian Head Office, Sydney Olympic Park, NSW for $46.2 million, representing a yield of 5.4%. The property is predominantly leased to a subsidiary of Thales Group, a leading international aerospace, transport and defence contractor
listed on the Euronext Paris, with a lease term of 11.9 years remaining at the time of settlement; and
- 100% of Telstra Canberra Head Office, ACT for $108.5 million, representing a yield of 6.9%. The property is predominantly leased to Telstra with a remaining lease term of 6.6 years at the time of settlement.
The total consideration for the Acquisitions is $206 million (excluding transactions costs), reflecting a weighted average 6.1% initial passing yield. The Acquisitions feature:
- strong tenant covenants with the properties predominantly leased to multinational, ASX-listed and government tenants;
- a long, weighted average lease expiry of 10.1 years;
- fixed rental reviews and a weighted average rent review of 3.5% p.a.; and
- enhanced scale and diversification across geography and sector, including increasing exposure to the strongly performing office sector from 26% to 31%.
| ||Pre- Acquisitions||Acquisitions||Post- Acquisition|
|Number of properties||114||3||117|
|Weighted average capitalisation rate||6.01%|| 5.44%||5.96%|
|Weighted average lease expiry||12.8 years||10.1 years||12.5 years|
|Weighted average rent review||2.8%||3.5%||2.9%|
|Fixed rent reviews||66%||100%||69%|
The REIT will undertake a fully underwritten institutional placement to raise approximately $180 million (Placement) to fund the Acquisitions and associated transaction costs. The Placement is fully underwritten by J.P. Morgan Securities Australia Limited
and UBS AG, Australia Branch.
The Placement will be issued at a fixed price of $4.74 per security, which represents a:
- 3.9% discount to the last close of $4.93 on 4 June 2019
- 3.2% discount to the 5 day VWAP of $4.90 on 4 June 2019
- FY20 Operating EPS yield of no less than 5.9%4
Securities issued under the Placement will rank equally with existing CLW Securities and will be entitled to the distribution for the three months to 30 June 2019.
Security Purchase Plan
Eligible securityholders in Australia and New Zealand will be invited to subscribe for up to $15,0005 of new securities, free of brokerage and transaction costs, via a SPP. New securities issued under the SPP will rank equally with existing CLW securities
from the date of issue, however as they are issued after the record date, new securities will not be entitled to the distribution for the three months to 30 June 2019. The new securities will be offered at a price of $4.669 per security (being the Issue Price under the Placement adjusted for the 30 June 2019 distribution of 7.1 cents per security). The SPP is expected to raise up to $10 million6 and will
not be underwritten.
Further information on the SPP will be lodged with the ASX and sent to eligible securityholders on Thursday, 13 June 2019.
Capital management initiatives
As part of ongoing capital management, the REIT completed the following initiatives:
- Extended its existing bank debt facility by one year;
- Introduced a new offshore lender with a new $100 million, five year debt facility;
- Entered $200 million of new interest rate swaps; and
- Reset $100 million of interest rate swaps with 6 years remaining term to capitalise on the low interest rate environment.
Following these initiatives, the REIT has no debt maturing until FY23 and the weighted average hedged rate has reduced from 2.5% to 2.1%.
Including the impact of the Acquisitions, Placement and ongoing capital management initiatives and barring any unforeseen events and no material change in market conditions, CLW provides the following guidance:
- FY19 Operating EPS of 26.9 cents per security, at the upper end of previous guidance
- FY20 Operating EPS growth guidance of no less than 3.75%.
- Following the Acquisition and the Placement, the REIT's pro-forma7:
- balance sheet gearing is forecast to be 29.3%, within CLW's target range of 25 – 35%; and
- look through gearing is forecast to be 35.9%.
|Record date for SPP Tuesday|| Tuesday, 4 June|
|Trading halt and announcement of the Transaction||Wednesday, 5 June|
|Institutional Placement bookbuild||Wednesday, 5 June|
|Trading of securities recommences on the ASX||Thursday, 6 June|
|Settlement of securities under the Institutional Placement||Tuesday, 11 June|
|Allotment and normal trading of securities issued under the Institutional Placement||Wednesday, 12 June|
|SPP offer opens and booklet is dispatched||Thursday, 13 June|
|Record date for June quarter distribution||Friday, 28 June|
|SPP offer closing date ||Thursday, 4 July|
|SPP allotment date||Thursday, 11 July|
|Despatch of holding statements and normal trading of new securities issued under the SPP||Friday, 12 July|
All dates and times are indicative only and subject to change. Unless otherwise specified, all times and dates refer to AEST.
Additional information about the Acquisitions and Placement including certain key risks are contained in the investor presentation released to the ASX today.
1 The responsible entity may (in its absolute discretion), in a situation where total demand exceeds $10 million, decide to increase the amount to be raised under the SPP to reduce or eliminate the need for scaleback
2 Barring any unforeseen events and no material change in market conditions
3 Metrics are as at 31 December 2018, adjusted for transactions completed post balance date (see Appendix A of the Investor Presentation for a reconciliation of portfolio metrics from 31 December 2018 to 5 June 2019)
4 Based on CLW's FY20 Operating EPS growth guidance of no less than 3.75% (barring any unforeseen events and no material change in current market conditions)
5 Securityholders are restricted from being issued more than $15,000 worth of securities under an SPP in any consecutive 12-month period. As such, the amount Eligible Securityholders are able to subscribe for under the SPP will be reduced by
any amount received under CLW's previous SPP announced on 17 October 2018 and issued on 21 November 2018
6 The responsible entity may (in its absolute discretion), in a situation where total demand exceeds $10 million, decide to increase the amount to be raised under the SPP to reduce or eliminate the need for scaleback
7 As at 31 December 2018, adjusted for the acquisition of Henley Beach Hotel by LWIP for $10.3m (CLW share $5.1m), proceeds from the Dec-18 and Mar-19 DRPs of
$9.5m, the portfolio revaluation as at 30 June 2019 and ongoing capital management
View the ASX Release
View the Portfolio acquisition and equity raising presentation