Growthpoint Properties Australia (ASX: GOZ) today requested a trading halt in its securities pending an announcement relating to proposed acquisition of Queensland based A-grade office asset and the right issue placed to partially fund the transaction.
Subsequently, Australian Securities Exchange announced that the securities of Growthpoint Properties Australia Limited have been placed into a trading halt. As per the statement, trading halt will continue until the earlier of 21 November 2018 or the release of market announcement as intended by the company.
In a separate market release, Growthpoint Properties Australia today announced that the company has exchanged contracts for the acquisition of an A-Grade office asset being 100 Skyring Terrace, Newstead, Queensland at the purchase consideration of $250 million.
For this purpose, the company seeks to raise new funds via right issue of approximately $135 million at an offer price of $3.46 per security. Holding company, Growthpoint Properties Limited has reportedly committed to take up its full entitlement of approximately $89 million worth of securities under the Rights Offer.
Details of a Property: A-grade office asset to be acquired by the company is located in Newstead, one of the five urban renewal areas in Brisbane’s near city office market which have been identified for urban renewal (“Urban Renewal Precinct”). The building covers 24,665m² of lettable area across large floor plates and was completed in 2014. Further, the property is fully leased with major ASX-listed tenants including Bank of Queensland and Collection House with the first significant lease expiry not until May 2026. Weighted average lease expiry of the property is 7.5 years.
Benefits of acquisition: The company has proposed to acquire 100% occupancy of the property which is expected to deliver attractive WARR of ~3.9% per annum. Net passing income of the company is reported to $15.3 million with passing initial yield of 6.1%. Further, on overall basis, the company believes the takeover is accretive to FY19 FFO per security and will enable the company to deliver attractive FY19 DPS yield on Issue price of 6.6%. The transaction further tends to deliver proforma gearing of 37.6% – 38.8%1 , below the midpoint of Growthpoint’s 35% - 45% target gearing range.
Under the Rights Offer, eligible securityholders will be invited to subscribe for 1 new Growthpoint security for every 17.65 existing Growthpoint securities held on the recode date of 21 November 2018. The issue price has been set to $3.46 per new security. Up to approximately 39.0 million new securities are expected to be issued, which represents approximately 5.7% of Growthpoint securities currently on issue.
The share of Growthpoint Properties Australia last traded at $3.610 with market capitalization of $2.49 billion as on 19 November 2018. Over the past one year, the stock has witnessed a positive performance change of 4.64%.
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