Centuria Office REIT has announced a $201m equity raising at $2.50 per unit, in order to fund the $273m acquisition of two office buildings.
While the company reiterated previous FY22 guidance, Credit Suisse notes the transaction is dilutive to the broker’s funds from operations forecasts. These are updated by -1.3%, -2.6% and -2.6% through to FY24, based on an incremental cost of debt of 2.4%.
While the buildings have a combined 99.8% occupancy rate, Credit Suisse highlights Healius is unlikely to renew its lease following expiry in September 2022, accounting for 30% of the asset’s income.
The Neutral rating and target price of $2.48 are retained.
Sector: Real Estate.
Target price is $2.48.Current Price is $2.45. Difference: $0.03 – (brackets indicate current price is over target). If COF meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
