Australia’s largest real estate IPO of the year, the $567.6 million float of GDI Property Group, has fallen 10% on its debut, bucking a broader market rise.
At 1205 AEDT, five minutes after listing, GDI fell 10% to 90 cents, against a benchmark index increase of 0.46%.
The disappointing debut comes despite strong demand for GDI’s equity raising, seen at the time as part of strong market appetite for new property trusts.
Lead manager Credit Suisse raised $310 million in new equity for the float last month and an additional $256.7 million was allocated to existing investors, along with management. About 80% of existing unit holders in the GDI syndicates chose to stay in and their purchase of additional stock put the effective rollover rate at 85 to 90 per cent.
GDI executive chairman Tony Veale and managing director Steve Gillard took a combined 10.5% of the $567.6 million float.
The GDI Property Group will control about $867 million in assets at listing, including directly owned assets of about $680 million. The trust will use the proceeds of the raising to bankroll two acquisitions, including an office tower on Queen Street in Brisbane, valued at $120 million. Other properties include 233 Castlereagh Street in Sydney, 197 St Georges Terrace and the Mill Green complex in Perth, and 25 Grenfell Street in Adelaide.
GDI lists on the same day as PACT group, which Credit Suisse is also running.