- Centuria Industrial REIT (CIP) agrees to buy four urban infill industrial freehold assets and completes the purchase of four other freehold assets for a total of $351.3 million
- The acquisitions are based on an average initial yield of 4.1 per cent and a weighted average capitalisation rate of 4.23 per cent
- CIP is launching a fully underwritten institutional placement to raise approximately $300 million and a non underwritten Unit Purchase Plan (UPP) to raise approximately $25 million to partially fund the acquisitions
- Shares in CIP remain in a trading halt at $4.01
Centuria Industrial REIT (CIP) has agreed to buy four urban infill industrial freehold assets and has completed the purchase of four other freehold assets for a total purchase price of $351.3 million.
The acquisitions are based on an average initial yield of 4.1 per cent and a weighted average capitalisation rate of 4.23 per cent.
The assets include a $200.2 million distribution centre in the Fairfield infill industrial market in central-western Sydney, as well as seven other urban infill assets diversified across key industrial sub-sectors such as distribution centres, cold storage and transport logistics for $151.1 million.
CIP is launching a fully underwritten institutional placement to raise approximately $300 million and a non underwritten Unit Purchase Plan (UPP) to raise approximately $25 million to partially fund the acquisitions.
The raise is also planned to provide capacity to debt fund CIP’s pipeline of off-market acquisitions in due diligence to the tune of $100 million.
The pricing of new units will be set today through a book build procedure, subject to an underwritten floor price of $3.80 per unit.
The underwritten floor price is $5.01 per unit, which is a 5.2 per cent discount to the CIP closing price of $4.01 on September 22, 2021.
CIP’s manager and largest unitholder, Centuria Capital Group (CNI), is unable to engage in the placement without unitholder consent. Nevertheless CNI plans to mitigate the dilution of its ownership position by purchasing CIP units in the aftermarket.
Eligible unitholders in Australia and New Zealand will be asked to subscribe for up to $30,000 in additional units through the UPP at the same issue price as the placement.
CIP fund manager Jesse Curtis said the acquisitions represented high-quality assets in urban infill locations benefitting from low vacancy and a scarcity of development land restricting new supply.
“We consider the Acquisitions to be under rented as market rents have continued to grow at a rapid rate on the back of accelerating tenant demand, driven by e-commerce and last-mile users,” he said.
“The WALE of 3.8 years provides the opportunity to leverage CIP’s strong leasing capability to achieve positive rental reversion capturing outsized rental growth being experienced within infill industrial markets.
“In addition, a number of the sites have value add potential through leasing, development or reportioning, adding to CIP’s value-add pipeline.”
CIP’s portfolio will grow to 75 industrial properties worth $3.5 billion (98.4 per cent freehold) as a result of the purchase, reaffirming its position as Australia’s biggest pure-play industrial REIT.
FY22 guidance of funds from operation of no less than 18.1 cents per unit and distribution of 17.3 cents per unit remain unchanged.
Shares in CIP remained in a trading halt at $4.01.