23rd Jan 2015 08:51
LONDON (Alliance News) - Custodian REIT PLC Friday said it plans to raise around GBP20 million before costs and expenses via a share placing, funds it said it will use to invest to expand and diversify its portfolio.
The real estate investment trust said it may increase the issue size, depending on demand, but will issue the shares at 104 pence each.
Custodian REIT shares were trading at 105.50 pence Friday morning, down 0.5%.
"The board and the fund manager believe the Issue is in shareholders' interests as it will increase the company's NAV [net asset value] and offer the opportunity to further diversify its portfolio, with the proceeds expected to be invested on a timely basis," the company said.
The company said it has contractually committed to deploy cash of GBP2.5 million on a pre-let development funding, and has GBP6.5 million of properties under offer. The acquisitions are being funded from debt which the company said will leave it with "limited headroom" for further investments.
However, the company said it sees "significant opportunity" to acquire further assets that can increase diversification in its portfolio and enhance income yield.
It said it believes investor demand from institutional or open-ended funds, public property companies and overseas investors will continue through the first half of 2015 and that the property market is at the beginning of a phase of rental growth, which will enhance future income returns and support capital value growth over the long-term.
"This placing will therefore support the investment strategy and allow the company to maximise the current market opportunity," it added.
The issue is expected to close on February 12, and is being led by Numis Securities Ltd.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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