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SCA Property Group announces capital raising: Should you buy?

Earlier in the month, Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP), otherwise known as Shopping Centre Australasia Property Group or simply SCA Property Group, announced that it would be conducting a unit purchase plan.

First and foremost, it should be noted that a stapled unit is created when two or more different securities are contractually bound together and cannot be sold separately and are thus treated as a single security. In this situation, the stapled security is SCA Property Group, which bounds SCA Retail Trust and the SCA Property Management Trust. One stapled security represents one unit of each security.

Here are some of the important things you need to be aware of:

  • Eligible shareholders are being given the opportunity to buy additional stapled units in the group worth either $5,000, $10,000 or $15,000.
  • No brokerage or other charges will apply.
  • Those participating would receive a 1% discount for any units purchased (based on a 10-day average price for the stapled units over the last 10 ASX trading days of the offer period).
  • The establishment time for eligible unitholders was 7:00pm (Sydney time) on Thursday 5 March 2015.
  • Entitlements are non-renounceable. That means the offer cannot be transferred to other investors.
  • The offer period opened on 10 March 2015 and will close at 5:00pm on Monday 30 March 2015 (Sydney time). The unit registry must have received payment by that date.

The offer aims to raise $20 million, whereby directors reserve the right to accept applications in excess of $20 million, or they can choose to scale back applications exceeding $20 million.

The capital raised will be used to pay down debt which was used to fund prior acquisitions, and to allow SCA Property Group to take advantage of any further opportunities down the track.

Should you participate?

SCA Property Group is a spin-off from Woolworths Limited (ASX: WOW) which, together with Coles (owned by Wesfarmers Ltd (ASX: WES)) are its major tenants.

Since being spun-off in 2012, SCA Property Group has generated fantastic returns for shareholders having risen more than 45% in that time, handily outpacing the benchmark S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO).

Meanwhile, it reported 12.5% growth in funds from operations (FFO) in its most recent earnings results, while its statutory net profit after tax (NPAT) also rose 128.4% to $98.2 million. It also offers a 5.5% unfranked dividend yield which is appealing, considering interest rates are likely to fall even further. With solid growth and a compelling dividend, participation in the unit purchase plan should be considered.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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