Centuria Industrial are raising $140m to strengthen its balance sheet and to provide funding flexibility to execute its strategy of owning quality industrial assets located within infill markets close to major infrastructure.
Last week the fund said it was well placed with a strong balance sheet, however the move to raise additional equity will ensure the fund has further headroom and be in a position to its' debt covenants increasing the resilience of CIP’s balance sheet whilst providing significant flexibility to pursue opportunities which are complementary to the portfolio.
CIP Fund Manager, Mr Jesse Curtis, commented: "CIP’s portfolio is currently in a strong position with high occupancy, a long weighted average lease expiry profile and income backed by a defensive tenant base. Undertaking the Equity Raising will further strengthen CIP’s balance sheet by reducing gearing to 27.7% and provide significant liquidity. As Australia’s largest domestic pure play industrial REIT, CIP will have over $200 million in cash and undrawn debt facilities, which will significantly increase headroom to debt covenants and provide the opportunity to capitalise on attractive transaction opportunities should they arise.”
The equity raising will comprise a ;
- fully underwritten institutional placement to raise $130.0 million
- Non-underwritten UPP to eligible unitholders in Australia and New Zealand to raise up to $10.0 million – Eligible unitholders will be invited to subscribe for up to a maximum of $30,000 in additional units under the UPP, at the same issue price as the Placement and free of any brokerage or transaction costs
The underwritten floor price of $2.54 represents a:
- 8.0% discount to the last close price of $2.76 per unit on 8 April 2020
- 8.6% discount to 31 December pro forma NTA per unit post Placement
- 7.5% FY20 pro forma FFO yield post Placement
- 7.4% FY20 pro forma distribution yield post Placement
The financial impact of the equity raising is that its FY20 FFO guidance is revised to between 18.9 – 19.3 cents per unit however its FY20 distribution guidance of 18.7 cents per unit is maintained. The funds pro forma gearing is forecast to be 27.7% (reducing from 35.5%) and the pro forma 31 December 2019 NTA per unit is forecast to be $2.78 per unit.