Charter Hall’s Share Price Rises after AFO Takeover Announcement

Shares of Charter Hall Group Ltd [ASX:CHC] are performing well today following yesterday’s trading halt after Charter Hall Long WALE REIT announced three new acquisitions and an equity raising of $180 million.

At time of writing, Charter Hall’s share price is trading at $10.86, an increase of 4.12% from opening.

The move is an impressive addition to their resume and adds to an existing $28.4 billion of leased property in the office, retail, industrial and social infrastructure sectors. And it comes only nine months after their previous listed company takeover of Folkestone Ltd, a Melbourne-based investment company.

It appears investors are more than excited by the news, driving up the stock price two days in a row. More on the acquisitions below…

The next step for Charter Hall’s share price

Two days ago, the company agreed to acquire 50% of the Brisbane City Council Bus Network Terminal in Eagle Farm ($51.3 million purchase with a yield of 5% and a remaining lease term 19.2 years), 100% of the Telstra Canberra Head Office ($108.5 million with a yield of 6.9% and a remaining lease term of 6.6 years) and 100% of Thales Australian Head Office, Sydney Olympic Park ($46.2 million, with a yield of 5.4% and a remaining lease term of 11.9 years).

In total, the acquisition for the three properties equals $206 million with a weighted average initial passing yield of 6.1%.

This is not the only exciting news coming from Charter Hall. Rumours were jittering on Monday with the whispers of a mystery buyer coming after the Australian Unity Office Property Fund [ASX:AOF], part of a raid orchestrated by JPMorgan. The identity was only announced after market close as part of a strategic alliance between Charter Hall and Abacus Property Group.

The deal made by the consortium fits their profile perfectly, as the AOF has nine office properties in five Australian capital cities. This aligns well with the investment objectives the two companies hold.

According to the Sydney Morning Herald, this has come about due to of a number of Australian REITs trading below their net tangible asset value combined with low interest rates.

The strategic deal has seen Abacus’ share price rise today by 2.51% resulting from news of the deal, trading positively since the news released on Tuesday.

Should you invest in Charter Hall?

In terms of the acquisitions, this is great news for the property investors. Their profiles are growing in a time of great uncertainty, and when many are starting to quiver in fear. Their holds are growing, which is great news for investors looking to passively enter into the real estate market, without putting down enough for a home of their own.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

PS: Not sure whether Charter Hall’s your cup of tea, but still looking for a winner? Take a look at this FREE report detailing Australia’s coming infrastructure boom! Click here to download.


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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