Charter Hall abandons IPO of Long WALE REIT

Charter Hall securities were down 3pc after it put the $1.25 billion listing of its Long WALE REIT on hold.

Charter Hall chief executive David Harrison at the company’s annual general meeting. (Photographer Adam Yip)

Charter Hall Group’s securities were down 3 per cent in early trade after the group decided to put the $1.25 billion listing of its Long WALE REIT on hold.

Charter Hall (CHC) said that despite receiving significant retail demand for the $1.12 billion initial public offering for the trust, the institutional offer of about $350 million, conducted yesterday, had not won sufficient quality of support appropriate to create an orderly market.

Charter Hall said it had elected not to proceed with the IPO of Long WALE REIT as scheduled, which may leave the way open for a repricing or a recutting of the 66 asset portfolio it has assembled.

The group said it “will consider alternative options for the assets” slated for the proposed fund.

However, the fall out across the sector could be limited.

“I don’t think now is the time to throw the baby out with the bath water,” Petra Capital analyst Michael Vincent told clients.

“Let’s remember that Long WALE REIT was only paying a yield of 5.3 per cent for second tier assets.

“Most of the successful REIT IPO’s recently have been paying a yield of over 7 per cent. With 10-year government bonds now at 2.3 per cent pricing has just changed,” he wrote.