Centuria Seeks $51.0 Million Raising To Back Its Industrial Assets Acquisition

  • Dec 04, 2018 AEDT
  • Team Kalkine
Centuria Seeks $51.0 Million Raising To Back Its Industrial Assets Acquisition

Centuria Industrial REIT unveils the acquisition of two high quality industrial assets in the region of Western Australia and Queensland. The acquisition is to be financially backed by the equity raising of approximately $51.0 million.

In the announcement dated 4 December 2018, Responsible Entity of Centuria Industrial REIT (ASX: CIP), Centuria Property Funds No. 2 Limited (CPF2L) announced the 100% acquisition of two industrial sites in Archerfield, Queensland and Hazelmere, Western Australia for a combined value of $54.4 million. The company further revealed its plan to raise approximately $51.0 million at an issue price of $2.77 per CIP unit to partially fund the acquisition.

CIP Fund Manager, Mr. Ross Lees commented: “The Acquisitions are consistent with CIP's strategy of investing in attractive fit-for-purpose assets in established locations and improves CIP's profile as Australia’s leading pureplay industrial REIT.”

The industrial assets acquired by the company includes 149 Kerry Road located in Archerfield, Queensland with an initial yield of 6.5% and Gross Lettable Area (GLA) of 13,774 sqm. Second property is 155 Lakes Road and 103 Stirling Crescent located in Hazelmere, Western Australia purchased at $23.8 million. It has an initial yield of 7.5% and Gross Lettable Area (GLA) of 9,973 sqm.

Both the properties are 100% occupied that includes only blue-chip ASX-listed tenants. The company expects to settle the transaction for 149 Kerry Road, Archerfield and 103 Stirling Crescent, Hazelmere during December 2018. But 155 Lakes Road, Hazelmere is expected to be settled by February 2019.

Archerfield was acquired from Centuria Metropolitan REIT (ASX: CMA) on arm’s length terms with CIP participating in an on-market process. The CPF2L directors determined that the acquisition met CIP’s investment criteria and was in the best interests of CIP unitholders.

On financial front, the company’s expectation for Fiscal 2019 remains unchanged following completion of the Acquisitions and Equity Raising. In today’s announcement CIP reaffirmed its previous guidance to Distributable earnings per unit (EPU) of 18.5 - 19.0 cents per unit and Distributable earnings per unit (EPU) of 18.5 - 19.0 cents per unit. Further, CIP continues its de-gearing strategy with pro forma gearing reducing from 38.4% to 36.5% following completion of the Acquisitions and Equity Raising.

The company is already out to reach its institutional investors, seeking approximately $29 million equity raising from institutional component. Remaining $22 million of the Equity Raising is slated to be raised through retail component of the entitlement offer. All these equity raisings are undertaken through 1 for 13.5 accelerated non-renounceable entitlement offer at an issue price of $2.77 per unit. The price represents 3.1% discount to the last close price of $2.86 on 3 December 2018 and 6.7% FY19 forecast distributable earnings yield.

The good news is that the holder of new units issued under this equity raising would be entitled to receive distribution for the quarter ending 31 December 2018, expected to be 4.6 cents per CIP unit.

Moelis Australia Advisory Pty. Ltd. and UBS AG, Australia Branch are acting as underwriters to the Equity Raising. Moreover, retail entitlement offer will reportedly open on 10 December 2018 and close on 19 December 2018. Currently, CIP shares are into trading halt. It last traded at $2.860 with market capitalization of $710.3 million.


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