Tag: CQR

Credit Suisse believes the company’s $275m capital raising should address any market concerns about gearing. The issue is dilutive to earnings by around -20% but pro forma gearing reduces to 22.6% from 32.1%.

Charter Hall Retail has acquired an interest in a $1.7bn portfolio of convenience retail assets leased to BP Australia. The investment is via a $137m equity interest.

The company will acquire Rockdale Plaza for $142m on a 6.25% capitalisation rate. This is a high-quality metro asset, UBS observes, with strong operating metrics.

UBS reduces valuation by -8%. The broker has reviewed income on an asset by asset basis and finds there is no sign of a broad-based improvement outside of mining-exposed assets, Dick Smith vacancies and the recycling into higher quality assets.

The business is now re-set to the domestic portfolio. Credit Suisse notes a gradual decline in occupancy and same store operating income growth. Growth through acquisitions is expected to become tougher, given cap rate compression.

With the A-REIT sector down around 10% over the last two weeks, the broker thinks stock are now looking a little more attractive. Valuations have continued to improve for the most part and the near-term risk capital risks are diminishing. Debt is also cheap, meaning accretive acquisitions are still possible for many.

An operational update showed solid results in the broker’s view but there are no changes in earnings estimates.

Charter Hall Retail has upgraded its guidance and lifted its payout ratio by 5%, as well as announcing a $200m capital return from asset sales, the broker notes. CQR intends to increase gearing to snap up more local bargains and the broker finds the strategy and disclosure impressive.