Charter Hall Retail REIT (ASX:CQR) has gone into a trading halt this morning to announce the acquisition of Rockdale Plaza, 12km south-west of the Sydney CBD.
Charter Hall Retail is a real estate investment trust managing $2.8 billion in assets through a portfolio of 58 properties. The REIT is focused on convenience-based, supermarket-anchored shopping centres delivering stable occupancy rates.
In 1HFY19, the portfolio occupancy rate was 98.1%. Convenience-based non-discretionary retailers made up 92% of retail income, most of which came from companies such as Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Wesfarmers Ltd (ASX: WES).
The acquisition announced today is a 100% interest in Rockdale Plaza in NSW. The total consideration for the purchase is $142 million, representing a capitalisation rate of 6.25%.
Charter Hall is going to undertake a fully underwritten $150 million institutional placement at an issue price of $4.51 per unit as well as a non-underwritten Unit Purchase Plan (UPP) to eligible unitholders, expected to raise up to $10 million.
Charter Hall also confirmed that FY19 operating earnings growth is still projected at 2%, in line with previous guidance.
Rockdale Plaza is located 12km from Sydney’s CBD and has an occupancy rate of 99.8%. More than half of the rental income from the centre comes from major tenants Woolworths, ALDI, Big W and seven other retailers. Annual customer visitations are up 3% year-on-year to 4.5 million.
Charter Hall’s Retail CEO Greg Chubb said the acquisition will ensure long-term performance and sustainable growth.
“The acquisition of Rockdale Plaza offers the REIT an exceptional opportunity to acquire a high performing, convenience-based centre”, he said. “Underpinned by supermarkets and non-discretionary food and service-based uses, the acquisition aligns with the REIT’s investment strategy and enhances portfolio metrics to ensure we continue to deliver long-term sustainable growth in earnings for investors”.
The Charter Hall Retail REIT share price is up 9.93% over the last six months and 20.78% over a 12-month period. At the time of writing, the dividend yield is 6.12%.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.