CLW – Macquarie rates the stock as Underperform

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Charter Hall’s Long WALE REIT has acquired Telstra’s ((TLS)) portfolio of phone exchange properties in a consortium for $700m or a 4.4% yield. The acquisition will be supported by a $261m equity raising which the broker sees as neutral to earnings per share in FY20 while reducing gearing.

It’s a good deal with regard portfolio metrics, the broker suggests, but being earnings neutral it’s nothing to write home about. The broker continues to believe the stock is overvalued at the price. Underperform retained, target rises to $4.36 from $4.17.

Sector: Real Estate.

Target price is $4.36.Current Price is $5.46. Difference: ($1.10) – (brackets indicate current price is over target). If CLW meets the Macquarie target it will return approximately -25% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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