Arrowhead Property private placement oversubscribed by R90m

Posted On Friday, 24 January 2014 08:57 Published by
Rate this item
(0 votes)

Arrowhead Properties' plan to grow its portfolio to R10bn by 2016 is given a boost as a private placement to fund acquisitions is oversubscribed by R90m.

Mark KaplanJSE-listed property fund Arrowhead Properties’ (AWA) plan to grow its portfolio to R10bn by 2016 was given a boost on Thursday when a private placement to fund acquisitions was oversubscribed by R90m.

The group had initially sought R400m through the placement to partly fund acquisitions valued at R650m‚ which it announced last year. It managed to raise R490m.

These included buying chemicals company Sasol’s office building in Rosebank‚ Johannesburg and residential units at Monash University in Johannesburg.

In light of the private placement being substantially oversubscribed at a discount of just over 3% to Tuesday’s closing price‚ the amount of capital to be raised in terms of the private placement was increased to R490m.

A total 36 431 228 new A and B linked units were placed with qualifying investors at a combined price of R13.45 per linked unit.

Chief operating officer Mark Kaplan said the over subscription suggested confidence in Arrowhead.

“We are very pleased. We were expecting a 5% discount and not such a large oversubscription. We did not realise investors were so confident. The market is nervous because of macro-economic factors including US tapering‚” he said.

Arrowhead’s results for the year to September‚ released in November last year‚ showed it had achieved 12.36% growth in distributions‚ above the 7% average growth in the sector and the forecast 10% growth for the year.

Arrowhead’s portfolio is worth around R3.6bn and would grow to R4.1 bn on February 1 this year. Kaplan said Arrowhead was on track with its 2014 plans so far. “We should maintain double-digit distribution growth and beat the sector average‚” he said.

Arrowhead would continue its strategy of growing by acquisition.

Kaplan said Arrowhead’s model was to make yield-enhancing and risk-diversifying acquisitions.

Investec Asset Management analyst Peter Clark said Arrowhead’s distribution growth and acquisitions at good yields were why it was so attractive to investors.

“Arrowhead is something we like. They have above-sector-average distribution growth‚ mainly driven by accretive acquisitions where they have a good track record of acquiring assets at yields in excess of 10%‚ while their cost of funding is significantly lower‚” he said.

Last modified on Friday, 24 January 2014 09:04

Most Popular

GMI Property Group adds a New Mall to its Stable: Bronkhorstspruit Mall

Jul 21, 2022
GMI Properties Group announces the development of the much-anticipated Bronkhorstspruit…

Equites Property Fund and Mabel conclude B-BBEE transaction

Jul 21, 2022
Andrea Taverna-Turisan
The JSE listed specialist logistics property fund, Equites, today officially announced…

Broad commercial property market softening expected due to ongoing and more rapid rate of interest rate hiking

Jul 21, 2022
Default Image
The still-bigger 75 basis point hike announced this afternoon, after the previous 125…

The rapidly rising cost of living is reflecting in residential rentals

Jul 21, 2022
TPN Graph-Rental Demand
Demand for residential rental properties saw some recovery in the first quarter of 2022…

Sky City Mall: We’re expecting our horizons in 2022

Jul 21, 2022
We’re moving forward with changes driven by the convergence of pandemic and longstanding…

Please publish modules in offcanvas position.