Charter Hall Social Infrastructure Real Estate Investment Trust (REIT) (CQE) has announced it will undertake an equity raising which will include a fully underwritten institutional placement to raise $100 million and a non-underwritten unit purchase plan (UPP) to eligible untiholders to raise up to $15 million.
The move would be undertaken in order to strengthen CQE’s balance sheet and ensure it can withstand any unexpected cashflow and valuation impacts from the COVID-19 pandemic, CQE’s responsible entity Charter Hall Social Infrastructure said in an announcement to the Australian Securities Exchange (ASX).
The firm reiterated that CQE’s FY20 earnings and distribution guidance remained withdrawn as announced earlier in March and the trust would pay a June quarterly distribution with reference to its operating cashflow for the period.
As at 30 April, 2020, CQE said it experienced no closures of its childcare centres due to the COVID-19 pandemic and received 100% of expected rental payments from tenants for the month of March 2020 and 90% of expected rental payments from tenants for the month of April, 2020.
However, CQE estimated that approximately 15% to 20% of its tenants (by rental income) would be defined as a small and medium sized enterprise (SME) under the Federal Government definition and therefore covered by the National Cabinet Mandatory Code of Conduct under which landlords were obliged to provide rental relief in proportion to the reduction in trade.
“CQE will look to offset any short-term rental relief provided during the pandemic period with longer term benefits to CQE including, but not limited to lease extensions. CQE will work with tenants on a case by case basis, having considered how COVID-19 has impacted their businesses, to agree an appropriate way forward,” the company said in the announcement.