Centuria Capital Group Launches $100 Million Equity Raising To Back Centuria Metropolitan

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Centuria Capital’s (ASX: CNI) stock slipped 0.769% as broker were seen in the market, seeking to raise $100 million to sub-underwrite Centuria Metropolitan REIT capital raising of $276 million.

CNI’s listed REIT Centuria Metropolitan REIT (ASX: CMA) the owner of 19 high quality metropolitan assets portfolio announced the raising of $276 million fresh capital to buy four high quality office assets worth $521 million from Hines Global REIT. The offer is split into two components, that is $79 million institutional placement and $197 million entitlement. The issue price for the offer has been fixed at $2.43 a security.

Moelis Australia Advisory Pty limited and UBS AG, branch in Australia are acting as underwriters to the deal, launched on last Wednesday (10 October 2018). 

As per the announcement, it has been agreed that parent CNI will contribute $20 million to the purchase consideration of $500.9 million which represents a 3.8% discount to the independent valuations and an initial yield of 6.3%. Further, CNI committed to sub-underwrite up to $50 million of the retail component of the CMA Equity Raising. However, its maximum commitment to CMA Equity Raising and to CMA’s acquisition of the Hines Assets is set to $98 million.

This led parent Centuria Capital Group to launch $100 million capital raising on Wednesday by way of $20.4 million Placement and $79.7 million Entitlement offer at an issue price of $1.30 per new security. The issue price represents a 3.3% discount to the pre-launch last close. Further, the retail component of the offer is due to open tomorrow and is reported to stay in place until 26 October 2018.

The equity raising is said to be underwritten by Moelis Australia Advisory Pty Ltd while Shaw and Partners are acting as co-lead manager to lead manager Moelis.

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CPFL being a responsible entity of CMA announced that proceeds of the offer are intended to be utilized to fund support the acquisition of a high-quality office assets of Hines Global REIT, Inc. comprising of four assets independently valued at A$521 million. The portfolio includes 100% interest in:

818 Bourke Street, Docklands, VIC for A$223.3 million;

825 Ann Street, Fortitude Valley, QLD for A$169.5 million;

100 Brookes Street, Fortitude Valley, QLD for A$86.5 million;

and a 25% interest in 465 Victoria Avenue, Chatswood, NSW for A$41.6 million.

It has been stated that the acquisition will substantially improve the quality and scale of CMA’s portfolio and place it at a leading position in Australian REITs.

Centuria Metropolitan told that after the completion of $500.9 million acquisition and $276 million Equity Raising, it forecasts CMA’s Funds From Operation (FFO) to be 18.7 cents per security in FY19 while distribution for FY19 is anticipated to be 17.6 cents per security. Pro forma gearing is expected to increase from 28.3% to 36.6%18.

Whereas parent Centuria Capital Group provides FY19 guidance of 10.2 cents operating earnings per security (EPS) and 9.25 cents distribution per security (DPS).

In today’s trading session, the share price of CNI has fallen by 1.154% to last trade at $1.285 on 15 October 2018.

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