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REAL ESTATE INVESTMENT TRUSTS & FUNDS SALES & LEASING

Centuria taps market to fund 645m Hines buy

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CENTURIA will undertake an equity raising to fund the $645 million Hines portfolio acquisition, which comprises four assets diversified across Brisbane, Melbourne and Sydney.

Centuria Metropolitan REIT and the Lederer Group have teamed up to buy the portfolio with the trust acquiring a 100% interest in three of the assets including:

  • 818 Bourke St Melbourne
  • 825 Ann St and 100 Brookes St Fortitude Valley, Brisbane
  • and a 25% interest in 465 Victoria Ave Chatswood in Sydney for $501 million.

Centurial Capital CEO John McBain said the transaction represents another step change for the Centuria platform.

“The significant increase in high quality assets under management and the major co-investment in CMA (circa $78 million) is testimony to CNI’s strong, ongoing commitment to its funds management vehicles.

“Post the Equity Raising, CNI’s market capitalisation will increase to over $500 million, making CNI the 247th largest ASX company and further enhancing potential inclusion in the ASX300,” he added.

McBain added that it was delighted to invest alongside the Lederer Group for the third time this year.

The Lederer Group will acquire a 75% interest in 465 Victoria Avenue, Chatswood for approximately $125 million via a co-ownership agreement. This is the third successful direct asset partnership (201 Pacific Highway, St Leonards and 80 Grenfell Street, Adelaide) with the Lederer Group in 2018 and Centuria now manages over $300 million of direct real estate assets on behalf of the Lederer Group.

“They are a substantial and important investor in the Centuria platform and we welcome their continued interest,” he said.

Post transaction, Centuria group AUM will increase by 12% from June 2018 to $5.5 billion.

The acquisition is forecast to increase FY19 distribution by 13% to 9.25 cps and operating earnings by 7% to 10.2 cps.

To partially fund the acquisitions, CMA will undertake a $276 million equity raising. In addition, Centurial Capital has sub-underwritten $50 million in support of CMA, as well as make a $20 million contribution.

This contribution lowers the portfolio acquisition price for CMA which results in CMA acquiring the portfolio at a 3.8% discount to independent valuation.

Centuria is undertaking a fully underwritten $100 million equity raising. The new securities will rank pari-passu with existing securities and will be entitled to the full distribution for the FY19 half.

In addition, Centuria is commencing a corporate bond issuance seeking to raise an additional $75 million.

Moelis Australia acted as sole lead manager and underwriter to the equity raising. Shaw and Partners acted as co-lead manager on the equity raising and HWL Ebsworth is legal advisor.

Australian Property Journal