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Here’s why the Abacus Property (ASX:ABP) share price is in a trading halt

real estate investment trust trading halt represented by man holding hand up in stop motion and holding wooden block in the shape of a house
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The Abacus Property Group (ASX: ABP) share price won’t be going anywhere on Tuesday after the property company requested a trading halt.

Why is the Abacus Property share price in a trading halt?

This morning Abacus requested a trading halt whilst it launches a fully underwritten equity raising.

According to the release, Abacus is aiming to raise $402 million via a 1-for-4.8 accelerated non-renounceable pro rata entitlement offer in order to repay debt and increase its acquisition capacity for continued growth over the medium term.

In respect to the latter, management notes that it has a current identified acquisition pipeline comprising approximately $160 million of assets under active consideration. From these, approximately $130 million is in advanced negotiations with due diligence well progressed.

The company is raising the funds at $2.90 per new security, which represents a 6.5% discount to its last close price.

Abacus’ Managing Director, Steven Sewell, commented: “It has been immensely pleasing for Abacus to successfully deliver on its stated strategy. Since FY19, $926 million of capital has been deployed into acquisitions in the key areas of Office and Self Storage.”T

“This Entitlement Offer is expected to allow Abacus to extend its strong track record of long term value enhancing investments by providing an additional $911 million of acquisition capacity, ensuring Abacus will be in a strong position to continue to take advantage of the significant number of opportunities in these key sectors,” he added.

Trading update.

In addition to the equity raising, Abacus released an update on its performance so far in FY 2021.

It advised that trading conditions in its Self Storage portfolio have proved resilient. Its multi-pronged growth strategy including acquisition, development, expansion and optimisation has delivered a strong first quarter result.

This includes occupancy of 89.7% and revenue per available square metre (RevPAM) of $251. Positively, its rent collection remains high at 99%.

In light of this, it is expecting half year Funds from Operations (FFO) of 8.9 cents to 9.1 cents per security and an interim distribution of 8.5 cents per security.

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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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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