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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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.