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GPT Group to raise up to $850 million to fund Darling Harbour purchases

The GPT Group (ASX: GPT) share price has missed out on the market’s charge higher on Wednesday after being placed in a trading halt this morning.

According to the release, the property investment company requested the trading halt whilst it launches a capital raising.

What is GPT aiming to raise?

According to the release, GPT has launched a capital raising comprising a fully underwritten $800 million institutional placement and a non-underwritten security purchase plan to raise up to $50 million.

The new securities will be issued at a fixed issue price of $6.07 per security, representing a 4.1% discount to its closing price on June 18.

The company intends to use the proceeds of the capital raising to fund future growth opportunities and two acquisitions.

These are a 25% interest in both the Darling Park 1 & 2 office complex and Cockle Bay Wharf, Sydney for a total consideration of $531 million.

The release explains that following the completion of the acquisitions, including the interest currently held by the GPT Wholesale Office Fund (GWOF), GPT and GWOF will hold a combined 75% interest in the Darling Park 1 & 2 office complex and Cockle Bay Wharf.

What are these assets?

The Darling Park 1 & 2 office complex comprises 103,600 square metres of net lettable area across two 27-level office towers, providing premium office accommodation. Whereas Cockle Bay Wharf provides 8,151 square metres of dining and retail space.

The acquisitions provide a blended capitalisation rate of 5.04%, an initial yield of 5.3%, and a weighted average lease expiry of 5.2 years (including signed leases).

Another positive with the Darling Park acquisition is that it will give GPT a 25% interest in the proposed Cockle Bay Park development. This development recently received a Stage 1 planning approval and will comprise approximately 63,000 square metres of premium office accommodation and 10,000 square metres of retail and entertainment space.

GPT’s chief executive officer, Bob Johnston, believes this is a great opportunity for the company.

He said: “The Group is excited by this compelling Sydney office investment opportunity. Darling Park provides the Group with an enhanced exposure to the strong Sydney office market via modern, high quality assets and access to future growth through the Cockle Bay Park development.”

Mr Johnston also advised where the remaining proceeds would be going.

He added: “The proceeds will also be applied to funding the next stage of growth from within the Group’s development pipeline across the office and logistics sectors and will ensure that GPT has the capacity to continue to make additional investments, while also maintaining a very strong balance sheet position.”

GPT isn’t the only company in a trading halt today. Graphite producer Syrah Resources Ltd (ASX: SYR) requested a trading halt to raise $111.6 million

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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