Cromwell Property Group pressed a pause button on ASX after the company went to raise $300 million through Entitlement Offer.
Real estate investment manager, Cromwell Property Group (ASX: CMW) today announced that the company is taking up a 2 for 13 Entitlement Offer to raise to approximately $300 million at an issue price of $0.98 per security. The proceeds from equity raising will be reportedly utilized to fund Cromwell’s CEREIT Investment along with providing future growth opportunities and repayments of debt.
Cromwell CEO and Managing Director Paul Weightman said, “The Equity Raising proceeds provide Cromwell with the financial capacity to accelerate the ‘Invest to Manage’ strategy, and further leverage Cromwell’s ability to originate value enhancing opportunities across its businesses in both Australia and Europe, while maintaining an appropriate level of gearing.”
Moreover, out of $310 million, the company has received commitments for $210 million from underwriters and some other major shareholders. The issue price of $0.98 represents the 4.9% discount to Cromwell’s last close price of $1.030 on 23 November 2018.
As per the Cromwell’s official statement, the major portion of proceeds will be used to fund Cromwell’s approximately $124 million equity commitment in Cromwell European Real Estate Investment Trust’s (CEREIT) entitlement offer. This commitment relates to CREIT’s $350 million equity raising offer to partially fund its recent $600 million acquisition of 23 properties across three portfolios in Europe. Cromwell's equity investment in the CEREIT entitlement offer will maintain its 35.3% holding in CEREIT.
Mr. Weightman stated, “Cromwell has committed to subscribe in full for its pro rata share of CEREIT’s entitlement offer, which supports the continued growth of CEREIT, as well as providing Cromwell with attractive standalone returns. Approximately 45% of European AUM will be long-term following the completion of CEREIT’s recently announced acquisitions, a large achievement by Cromwell over the past 12 months.
Following the CEREIT investment and on completion of equity raising, the company expects its gearing to reduce from 37% to between 30% and 33%, strengthening the balance sheet of Cromwell. Meanwhile for full fiscal year 2019, the company reaffirmed its earnings and distribution guidance to operating earnings of not less than 8.00 cents per share and distributions of not less than 7.25 cents per share.
Cromwell has identified some accretive value-add development opportunities across the existing Australian balance sheet portfolio. After its recent successes at Soward Way and Northpoint, the company is actively progressing three other significant development opportunities, told Mr. Weightman.
Institutional Offer has opened today, i.e. 28 November 2018, and will reportedly close on 28 November 2018. The company further informed that retail component of the entitlement offer will open on 4 December for which offer booklet will be discretely sent to retail investors.
With a market capitalization of $2.05 billion, stock of Cromwell Property Group last traded at $1.030 and PE ratio of 9.470 x. Moreover, the stock has witnessed a marginal performance change of +0.49% over the past one year.