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It is confirmed.
AIMS APAC REIT is going to buy Woolworths' HQ in Sydney.
The price tag?
Around S$454 million.
This is going to increase the REIT's portfolio value by more than 26%.
As a long time investor of AIMS APAC REIT, I like the purchase for the following reasons:
As a long time investor of AIMS APAC REIT, I like the purchase for the following reasons:
1. The asset will increase the number of freehold assets held by the REIT.
2. The purchase will increase income visibility as there is a 10 years lease to Woolworths with annual rental escalation of 2.75%.
3. There is room to build more rentable space as the asset's plot ratio has yet to be maxed out which will allow for more organic growth in the future (and this is probably a big push for the REIT to make the purchase if we look at their commendable record in maxing out plot ratios of some of their assets in Singapore.)
4. The purchase is likely to be DPU accretive because it is going to be 60% financed by debt (which is likely to be competitively priced given the current low interest rate environment) and net proceeds raised from the recent S$250 million in perpetual bond issue will also be utilized.
A question on many unit holders' minds is probably will there be a rights issue?
A question on many unit holders' minds is probably will there be a rights issue?
The REIT manager has said that they could issue new equity.
Personally, I think that it is a forgone conclusion because when we compare the price tag of S$454 million and what we know in point number 4 above, there is a shortfall of some tens of millions of dollars.
Equity issuance could take the form of private share placements or a rights issue, of course.
As a long time unit holder, I hope that any equity fund raising is going to be a rights issue.
As a long time unit holder, I hope that any equity fund raising is going to be a rights issue.
This is so that I can increase my investment in the REIT probably at a discounted price.
After all, I never get invited to take part in private placements.
I suppose I will just have to wait and see.
Woolworths’ Full Year Result 26 Aug 21: Woolworths’ earnings led higher by Australian Food business.
References:
References:
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