Diversified property group Charter Hall updated its earnings guidance on Friday by 35.9 cents per security, while at the same time announcing a $275 million equity raising.
The earnings upgrade, equivalent to 18 per cent growth in post tax earnings per security, was driven by performance fees expected to deliver an additional $10 million of pre-tax revenue, Charter Hall said.
Funds managed by Charter Hall own a diverse range of property assets. Photo: Su-Lin Tan
“The additional performance fee announced today further demonstrates our commitment to driving investment returns for our investor customers,” managing director David Harrison said.
The operating earnings guidance upgrade was the triggered by a 5-year interim performance fee in the Charter Hall Office Trust partnership, Mr Harrison said.
The $275 million fully underwritten institutional placement at $5.48 per security will partially fund $333 million of co-investments with other capital partners.
The fixed issue price represents a 3.4 per cent discount to Charter Hall’s closing price of $5.67 on April 27, after which it announced a trading halt on the ASX.
The equity raising will enable Charter Hall to fund ongoing growth in its platform by investing alongside capital partners in nine existing funds/partnerships that are growing and two new fund/partnership initiatives.
The investments would enhance Charter Hall’s property portfolio by diversifying it, improving tenant quality and lengthening weighted average lease expires.
They were expected to generate an initial extra $1.8 billion of funds under management, and support further equity raising activity across the group’s fund platform, Mr Harrison said.
The new securities will rank equally to existing securities and will be entitled to a full distribution for the six months ending June 30, 2017.
Eligible securityholders will be offered an opportunity to apply for up to $15,000 of new securities, free of brokerage and transaction costs, the group said.
The deployment of the funds would be alongside capital partners across 11 Charter Hall funds with nine of these established and two new funds comprising a Direct Consumer Staples Fund and Counter Cyclical Trust with a global institutional investor, Macquarie Bank told clients in note responding to the announcement.
“This transaction is consistent with CHC’s strong track record of finding investment product for its capital sources (listed, wholesale and retail),” Macquarie said.