CFS Retail Property Trust has completed its $540 million equity sale enabling its purchase of four outlets from the struggling Direct Factory Outlet (DFO).
DFO reached agreement with its bank several weeks ago on refinancing its debt.
The CFS deal will reduce that debt (including to the Commonwealth Bank, which owns Colonial First State, which manages CFS).
In that respect it is a well-timed play for CFS which already is one of the biggest managers of retail centres in the country.
CFS Retail’s manager, Colonial First State Property Retail, said yesterday that 290.3 million units were placed at a price of $1.86. CFS Retail units will start trading on Monday at $1.95.
The proceeds will be used for the $498 million acquisition of the DFO stores, located at Homebush in Sydney and Essendon, Moorabbin and South Wharf in Melbourne.
"The positive feedback on the acquisition meant that the demand from existing and new investors was very strong and we welcome a number of new domestic and international investors who took the opportunity to purchase units under the institutional placement," CFS Retail fund manager Michael Gorman said in the statement.
The fund said in the statement that "The acquisition of DFO South Wharf and Homemaker Hub (‘South Wharf’) remains conditional upon CFX’s joint venture partner, The Plenary Group (‘Plenary’), securing financing, to increase its interest in South Wharf from 25% to 50% and the execution of non-compete agreements by key Austexx personnel.
"In the event that these conditions are not met, the acquisition of South Wharf will not proceed and CFX intends to use the capital raised for the asset (and associated acquisition costs) to initially retire debt and may choose to redeploy this capital in the future.
A unit purchase plan will be open for retail investors, offering units at the same price to those offered in the institutional placement.
It is expected to raise a further $5 million to $10 million which will be used to reduce debt.
CFS securities finished down 2.5% or 5c", at $1.90 against the issue price of $1.86.
Still in retail property and on a much happier note, Bunnings, the hardware chain owned by Wesfarmers, says it will spend $600 million expanding its presence in NSW.
Bunnings said yesterday that it will build 18 new big boxes across the state in the next three years and create around 2700 new jobs, with nearly 4,000 other jobs created in the construction phase.
It has secured 12 sites for stores in locations including Alexandria, Castle Hill, West Gosford and Tamworth.
It’s a sign the company is now starting to counter the $1.5 billion five year push into hardware by Woolworths with Lowes Cos of the US.
The company said it was already was building three new stores at Seven Hills, Port Stephens and Chatswood while it had bought an existing business at Lithgow.
Wesfarmers also was planning to open trade centres at St Peters on the southern edge of the central city and at Cromer at the back of the northern beaches.
"Our NSW opening program is part of our ongoing network expansion strategy across the country," Bunnings managing director John Gillam said in a statement.
Wesfarmers said the Bunnings store at Alexandria would be Australia’s biggest home improvement store, with floor space of 20,000 square metres. The store is scheduled to open in mid-2012.
"Our new store in Alexandria will enable us to showcase our ever expanding offer to customers with new categories including kitchen appliances and glass pool fencing and expanded ranges in landscaping and kids play equipment," Mr Gillam said.
Bunnings bought the Alexandria site from CSR according to a separate statement yesterday.
Wesfarmer’s shares rose 2.9%, or 98c, to a 27 month high of $34.73 yesterday.
That’s the highest since the end of June 2008.
