Centuria Industrial REIT (ASX:CIP) is raising $125 million to fund cold storage acquisitions 

  • November 17, 2020 03:48 PM AEDT
  • Kunal Sawhney
    Kunal Sawhney
    CEO Kunal Sawhney
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    Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge in the Australian Equities Market. Kunal obtained a Master of Business Administration degree from University of T...

Centuria Industrial REIT (ASX:CIP) is raising $125 million to fund cold storage acquisitions 

Summary

  • Centuria Industrial REIT is acquiring three cold storage facilities on the east coast. 
  • It is raising $125 million from institutional investors via fully underwritten offer. 
  • The industrial REIT has reaffirmed distribution guidance and upgraded FFO guidance. 

Centuria Industrial REIT (ASX:CIP) has executed contracts to acquire three cold storage facilities for $171.1 million. It is also undertaking a $125 million fully underwritten institutional placement, which would be partially used to fund the transaction. 

The three properties are located in New South Wales, Victoria, and Queensland. Fund Manager Jesse Curtis said that cold storage acquisitions depict their expectation for growth in the refrigerated logistics industry. 

Image Source: © Kalkine Group 2020

This expectation is, in part, driven by the rise in online food sales. Located in close proximity to the industrial market of Sydney, Melbourne and Brisbane, these properties have favourable connectivity. 

After the completion of the acquisition, the industrial REIT will have an asset size of 59 high-quality assets worth $2.3 billion with an occupancy of 96.8%. The overall portfolio would have a WALE of 9.7 years. 

CIP is undertaking a placement at an issue price of $3.06 per unit. It is drawing $58.7 million from the existing debt facility to partially fund the acquisitions and related costs.

The acquisition will be accretive to CIP’s FY21 FFO per unit. The industrial REIT has upgraded FFO guidance, which is expected to be a minimum of 17.5 cents per unit. It has also reaffirmed FY21 distribution guidance of 17 cents per unit. 

Pro-forma gearing of the REIT is forecast at 31.4% after the acquisition and placement. And pro forma NTA per unit is forecast at $2.81 per unit. With a gearing of around 31%, the REIT has the capacity to pursue an acquisition strategy. 

67-69 Mandoon Road, Girraween NSW

The property is closest to Paramatta CBD and is within reasonable distance of infrastructure hubs – Sydney International Airport and Port Botany. It is a temperature-controlled property, which would be acquired by sale. 

The cold storage asset would be leased back to Bidfood NSW. It is on a 7-year triple net lease with fixed annual rental reviews at 3%. The purchase price of the asset is $73.1 million. 

45 Fulton Drive, Derrimut VIC 

CIP is purchasing the asset for $49 million. The asset has a size of around 11k sqm high quality refrigerated distribution centre. It is under a 5.8-year lease with annual rent reviews of greater than CPI or 2.5% with a cap of 5%.

It is located in Melbourne’s western industrial precinct with good connectivity to the surrounding road network. Key infrastructure hubs near the asset include Port of Melbourne and Melbourne Airport. 

60-80 Southlink Street, Parkinson QLD

The purchase price of the property is $49 million. Key infrastructure hubs close to the asset include Port of Brisbane and Brisbane Airport. It can be operated at -25 degrees Celsius and has cross-dock loading and administration office. 

It is leased on a net lease with annual rent reviews of greater than CPI or 2.5% with a cap of 5%. The property has undeveloped land and provides scope for future development in a land constraint market. 

On 17 November 2020, CIP was trading at $3.150, with a market capitalisation of $1.60 billion.

 

 


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