Centuria Metropolitan Made An Accelerated Non-Renounceable Entitlement Offer To Raise $ 197M


Centuria Metropolitan REIT (ASX: CMA) is an owner of portfolio of 19 metropolitan assets of high quality and Centuria Property Fund Limited (CPFL) manages CMA. Lately, CPFL being a responsible entity of CMA announced about acquisition of interests in 4 assets worth $500.9 million of metropolitan quality for which it is trying to raise funds through equity worth $276 million with issue price of $2.43 per unit.

Centuria Metropolitan has made an announcement to raise capital through the placement and accelerated non-renounceable entitlement offer. Through institutional placement it has decided to raise approximately $79 million and through entitlement offer it will raise approximately $ 197 million (before costs). The underwriting of the placement and the entitlement offer is done through Moelis Australia Advisory Pty limited and UBS AG, branch in Australia. The entitlement is structured in such a way that issue for each new unit in CMA will be made for every 3 units in CMA held as on 12 October 2018. Through retail component of Retail entitlement offer, the company expects to raise approximately $ 95 million and $101 million through institutional entitlement offer before cost. [optin-monster-shortcode id=”wxhmli4jjedneglg1trq”]

As per the new entitlement offer of CMA

  • There will no product disclosure statement for the new units being issued.
  • Under Section 1012DAA(2)(f) of corporation act as modified by the legislative instrument the notice will also be provided.
  • CMA is obliged for regular reporting and disclosures.
  • None of the information is excluded as referred in sections 1012DAA(8) and 1012DAA(9) of the corporation act.
  • The potential effect of the entitlement offer will depend on number of factor which will depend on the number of units held under this offer.
  • In case 50% of the eligible unit holders take up their entitlement made under entitlement offer, then 40.5 million new units will be received by the new investors.
  • In case 25% of the eligible unit holders take up their entitlement made under entitlement offer, then 60.7 million new units will be received by the new investors and interest of those unit holders who do not take entitlement will be diluted.
  • In case none of the eligible unit holders take up their entitlement made under entitlement offer, then 80.9 million new units will be received by the new investors and interest of all those unit holders who do not take entitlement will be diluted.

The underwriter Moelis and UBS currently have more interest in 0.4% of CMA units and less than 1% interest of CMA units respectively. Even if the sub underwriting commitments gets defaulted both underwriters UBS and Moelis could obtain interest above 20% of the acquisition limits made through entitlement offer.

Also Centuria Capital Group (ASX: CNI) and associates has 23.4% voting power in CMA, It will sub-underwrite to a maximum $50 million through retail entitlement offer. The institutional entitlement offer will not be sub underwritten by CNI. CNI also have the power to increase the voting rights through its sub underwriting commitments which is already above 20%.

Since the inception the company has a positive performance return of 23.74%. Its’ one year performance result shows returns of 6.07%. The company’s share traded at $2.550 on 10 October 2018 with a PE of 6.82x with a market cap of $ 619.12 million. The company has made a net profit of A$ 85.1 million in FY18 with return of equity of 14.9%.

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