Why is Centuria Office REIT (ASX:COF) on investors’ radar?

Highlights

  • Centuria Office REIT is acquiring interests in two office properties in the established markets of Melbourne and Sydney.
  • The ASX-listed company is undertaking a capital raising of approximately AU$201 million including successful completion of AU$129 million institutional entitlement offer.
  • The firm has secured a position on the FTSE EPRA Nareit Global Developed Index, to be effective from 20 September 2021.

Centuria Property Funds Limited has updated on a capital raising program to fund the acquisition of two high-quality office properties. The deal is aimed at consolidating the position of Centuria Office REIT as Australia's largest listed pure-play office REIT.

Centuria Property Funds is the responsible entity of Centuria Office REIT (ASX:COF), which provides investors with income as well as the opportunity for capital growth from a pure-play portfolio of high-quality office assets in Australia.  

Related read: Can Australian property market breach $9 trillion mark by the end of 2021?

Acquisition of two high-quality office properties

Centuria Office REIT is set to acquire interests in two office properties in the prominent and established markets of Melbourne and Sydney at a cost of AU$273.1 million. COF presently owns a 50% interest in the Sydney property, and remaining interest is being acquired from Centuria 203 Pacific Highway Fund.

Image source: © Airdone | Megapixl.com

Following the completion of acquisition, COF will emerge as the largest-listed pure play office REIT in Australia with office assets worth AU$2.3 billion.

The acquisitions of the high-quality office properties at these popular locations with state-of-the-art specifications and amenities will strengthen the company’s diversified income profile.

Equity raising

Centuria Office REIT is raising AU$201 million capital to fund the new acquisitions.

Below are the details of the capital raising program:

  • The ASX-listed company has raised approximately AU$129 million successfully on completion of the institutional component of a fully underwritten entitlement offer.
  • COF is expected to raise AU$72 million on completion of the retail component scheduled to open on 13 September 2021.
  • The issue price is AU$2.50 per unit.

Image source: © Kritchanut | Megapixl.com

Also Read: A look at five funds with impressive dividend yields

FTSE EPRA Nareit Global Developed Index inclusion

The ASX-listed firm has secured a position on the Financial Times Stock Exchange (FTSE) European Public Real Estate (EPRA) National Association of Real Estate Investment Trusts (Nareit) Global Developed Index, to be effective from 20 September 2021.

This series tracks the stock performance by the listed real estate investment trusts (REITs) across the globe and represents leading players on its index on the basis of liquidity, size and revenue.

CFO’s inclusion in this global real estate index will upthrust the company’s market relevance over its global real estate competitors.

Must Read: Seven ASX-listed property stocks that pay dividends

FY22 guidance

The company has reaffirmed its guidance for FY2022 with funds from operations (FFO) of 18.0 cents per unit (cpu), reflecting a 7.2% yield on the issue price. Distribution is expected at 16.6 cpu for FY22, reflecting a 6.6% yield on the issue price.

Bottom Line

The addition of the new properties would deliver several benefits such as high occupancy, broader geographic diversification, and young assets with sustainable and affordable rent profiles. Moreover, the index inclusion boosts the company’s market relevance.

Stock Information: COF stock was trading at AU$2.470 at 1:54 PM (AEST) on 07 September 2021, with market capitalisation of AU$1.33 billion.

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