Storage King owner Abacus Property is seeking to raise $402 million from investors, beefing up its acquisition war chest as Australia’s economy emerges from under the pandemic’s cloud.
The group’s capital placement comes on the heels of another real estate fund, APN’s Convenience Retail REIT, tapping investors for $30 million and growth-focused property manager HomeCo earlier this week seeking $125 million to spend on health and welfare assets.
The spate of activity is a sign of growing confidence across the commercial real estate sector as border restrictions lift and consumer confidence soars.
Abacus, which specialises in office towers and self-storage, will use the funds raised to repay debt and boost the group’s growth-by-acquisition strategy over the medium term.
Managing director Steven Sewell said Abacus has spent $926 million on key office and self-storage acquisitions over the past year. “This entitlement offer is expected to allow Abacus to extend its strong track record of long term value-enhancing investments by providing an additional $911 million of acquisition capacity,” he said.
Abacus’ full ownership of Storage King is expected to increase the velocity of its acquisitions and give the group a significant competitive advantage.
Macquarie Capital will underwrite the institutional offer at a fixed price per security of $2.90, a 6.5 per cent discount to Monday’s closing price of $3.10. About 138.7 million new securities will be issued.
The trust’s largest investor Calculator Australia, which holds a 53.7 per cent stake, will take up its entire entitlement and will sub-underwrite the $49 million retail component of the offer.
Abacus is forecasting gearing of 17.5 per cent and an acquisition war chest of $911 million after completing the entitlement offer.
The group is actively looking at buying about $160 million in assets of which some $130 million are in advanced negotiations where due diligence is well progressed.
At the smaller end of the scale, APN’s Convenience Retail REIT is raising $30 million at $3.55 per share to fund the purchase of three service stations. It has a further nine petrol stations under advanced exclusive due diligence.
All up it expects to spend $75.3 million on a dozen properties, reflecting a 6.1 per cent yield.
APN said COVID-19 had minimal impact on REIT’s performance, with all service station sites staying open and trading. “The asset class has proven to be one of the most resilient, outperforming other property sectors during the COVID-19 pandemic and in the subsequent recovery phase,” it said.
The equity raising includes a security purchase plan for eligible security holders expected to raise a further $5 million.
New securities issued under $30 million placement stock will be entitled to the group’s upcoming distribution for the December quarter, expected to be 5.475¢ per share. Security purchase plan subscribers will be offered securities on an ex-distribution basis. Moelis Australia is the advisor.
The convenience fund reaffirmed its financial year 2021 distribution guidance of between 21.8¢ and 22¢ per security.
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Source: Thanks smh.com