Bunnings rights issue announced

The hardware sites giant will be buying more property.

As expected, Bunnings Trust (ASX: BWP) has announced along with its annual results a capital raising to purchase and leaseback another 11 sites, said to be in prime retail locations throughout the country.

The $300 million raising will be a 1 for 6.18 accelerated non-renounceable entitlement offer to help buy 10 Bunnings Warehouses and one bulky goods centre, realising $271 million for ultimate owner Wesfarmers (ASX: WES), which said this morning it was also having discussions with “other parties that would result in a separate transaction involving a Bunnings portfolio of freehold properties to release further capital from (its) balance sheet”.

The total price for the assets now being sold is $312 million at an overall yield of 7.35 per cent and the share offer will be at $2.30, compared to $2.41 when Bunnings went into a trading halt yesterday, saying a media inquiry indicated confidentiality about the raising may have been breached.

The purchase is reckoned to have a neutral effect on Bunnings balance sheet in 2014, but the company has forecast a 2% increase in distribution in 2015 over the 14.6 cents per unit forecast for 2014.

Bunnings Trust earns more than 90% of its income from the sites it leases to 67 Bunnings Warehouses owned by Wesfarmers. After being spun off by Wesfarmers in 1998, it has a current market capitalisation of $1.3 billion and is expected to resume trading tomorrow.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool contributor Andrew Ballard owns shares in Bunnings Trust and Wesfarmers.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More on ⏸️ Investing