Old dog Centuria Capital has learnt a new trick in a bid to drive down funding costs at its ASX-listed warehouses owner Centuria Industrial REIT (CIP).
The acquisitive property group had Morgan Stanley and Bank of America targeting Asian investors for a $300 million convertible bond raising on Thursday night, locking in debt at a 3.45 per cent to 3.95 per cent annual coupon.At worst, CIP will pay 3.95 per cent a year for the funding at a time when the cost of bank debt is at about 5.5 per cent. The new debt will replace some of CIP’s existing bank facilities, worth $1.61 billion at December 31 and drawn to $1.24 billion.
For their effort, convertible bond buyers would also get the right to convert to new CIP securities at about $4.16 each which, importantly, would be more than the REIT’s December 31 NTA at $4.08. The notes had a March 2028 maturity date and an investor put option giving the owner the right to redeem the notes from March 2026.
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