Centuria, Growthpoint and Cromwell join capital raising rush

Centuria, Growthpoint and Cromwell join capital raising rush

28 June 2019

The rush of property trust raisings shows little sign of slowing down, with the Centuria Industrial REIT, Growthpoint Properties and Cromwell Property Group all launching a fresh equity issue.

Property groups are capitalising on the buoyant conditions with investors eager to buy into REITs at a time of low interest rates.

Centuria is raising $70 million via investment banks UBS and Moelis.

Real estate investment trust Growthpoint Properties has also hired JP Morgan to raise $150 million of equity.

This week, Brisbane-based fund manager Cromwell raised $375 million to fund acquisitions and development projects.

The surge in equity issuance in the REIT sectors has risen past $4.4 billion in the 2019 year to date and has been rapidly absorbed by investors chasing yield, reports The Australian Financial Review.

Growthpoint, which is majority controlled by its Johannesburg-listed parent Growthpoint Properties, Cromwell and the Centuria-run listed fund are the latest property trusts to raise fresh equity after a run of major raisings by their peers, including Dexus, Mirvac, GPT.

Last month, Dexus raised $900 million, Mirvac raised $750 million and last week GPT raised $800 million to invest in commercial property around Darling Harbour.

Growthpoint’s managing director Tim Collyer said low bond yields and interest rates, with further cuts expected, had made REIT yields more appealing as investors swap out of previously high growth stocks in a slowing economy.

“People have gone more defensive and they see that REITs offer an attractive yield plus growth in the distributions or dividends,” he told The Australian Financial Review.

“As well the general equities investors were short on property stocks. They didn’t have enough exposure to the REIT sector.”

A-REITs are on a blended cost of capital below the capitalisation rates you can buy properties accretively,” said Peter Davidson, head of listed property at Pendal Group.