Abacus Property Group (ASX: ABP) shares have gone into an ASX trading halt with the announcement of preliminary FY19 results and a $275 million equity raising. Here’s what you need to know.
About Abacus Property Group
Abacus Property Group is a diversified property group that was established in 1996. Abacus invests across a range of sectors but has a particular focus on offices and self-storage. The company currently has an investment portfolio valued at roughly $2.3 billion.
FY19 Preliminary Results
Abacus shares went into a trading halt this morning as the company announced several preliminary FY19 results and an equity capital raising. The video below explains what a trading halt is and this tutorial explains what a capital raising means.
Abacus’ preliminary unaudited FY19 underlying profit was 24 cents per security, leading to a declared distribution of 18.5 cents per security. This represents an increase in dividends of 2.8% compared to 2018.
Preliminary unaudited net property rental income grew by 8% to $114 million, while a portfolio revaluation drove an expected increase in unaudited NTA per security to $3.33, up from $3.18 in FY18. This values the entire portfolio at roughly $2.3 billion.
Equity Raising
Abacus also announced a fully underwritten institutional placement to raise approximately $250 million and a non-underwritten security purchase plan to raise up to $25 million.
Proceeds from the equity raising are intended to be used to pursue in excess of $710 million of acquisitions. Some of these opportunities include:
- The acquisition of the Australian Unity Office Fund (ASX: AOF), which Abacus has already put forward an offer for
- $118 million for self-storage assets that are currently under contract or under consideration
- $68 million for asset development as part of a joint venture in Richmond, Victoria
- $220 million to acquire a minority interest in a Sydney CBD office asset
Both the institutional placement and the share purchase plan will see new securities issued at a price of $3.95 per share, representing a 7.5% discount to the last closing price.
The placement bookbuild will take place today and shares should be trading again tomorrow at market open.
Is Abacus A Buy?
I like Abacus’ strategy of divesting non-core retail and residential assets to focus on office and self-storage and it’s always encouraging to see growth in dividends and NTA. Although, with FY20 distribution growth estimated to be 2-3%, there may be better options available for dividend growth.
The dividend-paying companies in the free report below could be options to consider.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
