Centuria Metropolitan’s stock plunged 4.706% as it resumed trading on ASX after the completion of $179 million equity raising through Placement and Institutional Entitlement Offer.
In an announcement dated 11 October 2018, property group Centuria Metropolitan REIT announced the raising of $100 million from institutional entitlement offer as a part of accelerated non-renounceable entitlement offer of $197 million, while $97 million retail component remains pending. The group has also informed the successful completion of $79 million Placement to institutional investors under which approximately 33 million shares of CMA
will be issued at an offer price of $2.43 per share.
This equity raising of $179 million forms parts of CMA’s plans for raising fresh capital of $276 million to fund support the $500.9 million portfolio acquisition. Moelis Australia Advisory Pty Ltd and UBS AG, Australia Branch acted as an underwriter to the equity raising.
Yesterday, the entity of Centuria Metropolitan REIT, Centuria Property Funds Limited (CPFL) unveiled that it has inked an unconditional acquisition agreement with a subsidiary of US based Hines Global REIT, Inc. to acquire interest in Hine’s four high quality office assets located in metropolitan areas of Australia. The purchase consideration has been set to net $500.9 million, reflecting a discount of 3.8% to the independent valuation of the portfolio.
You must be wondering which office assets will be acquired?
Well, these four metropolitan office assets are 818 Bourke Street, Docklands, 100 Brookes Street, Fortitude Valley and 825 Ann Street, Fortitude Valley, and 825 Ann Street, Fortitude Valley.
If the deal goes through, Centuria will clutch 100% interest in these assets except for just 825 Ann Street, Fortitude Valley in which 25% interest will be given.
CMA Acting Fund Manager, Mr. Doug Hoskins stated that the acquisitions are located in inner metropolitan locations in Australian submarket where Centuria has a track record of leasing success. He added that takeover is highly complementary to Centuria’s portfolio which includes 21 metropolitan office assets and two industrial assets with a total portfolio value of approximately $1.6 billion.
What could be the impact on CMA’s Financial post acquisitions and equity raising?
The ASX listed metropolitan office REIT Centuria Metropolitan told that after the completion of $500.9 million acquisition and $276 million Equity Raising, it forecasts 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.
CMA’s Pro forma gearing is expected to increase from 28.3% to 36.6%, prior to the divestment of remaining industrial assets whereas post disinvestment, it is expected be within the target range of 25–35%.
However, to financially back this acquisition, the company still has to raise $97 million through Retail Entitlement Offer which is due to open on, 16 October 2018 and close on, 29 October 2018.
Centuria Metropolitan REIT further informed that new shares in the settlement of Placement and Institutional Entitlement Offer will be allotted on 24 October 2018. Also, the new securityholders will be reportedly entitled to receive full distribution for the quarter ending 31 December 2018, expected to be 4.358 cents per security.
CMA share price has fallen by 4.706% to last trade at $2.430 on 11 October 2018.
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