Trusts in a rush to raise capital

BUNNINGS Warehouse Property Trust has joined the list of trusts eyeing off a potential capital raising in the new calendar year.

BUNNINGS Warehouse Property Trust has joined the list of trusts eyeing off a potential capital raising in the new calendar year.

The move, which would take advantage of share prices trading higher than net tangible assets (NTA), comes as several property fund managers confirm they have been sounded out by trusts and corporate advisers for new propositions.

Macquarie's team is working on a potential Mexican REIT, which is said to comprise about 240 industrial sites and warehouses.

The listed data centre group NextDC is said to be looking at raising cash for centres on a sale and lease-back deal. That could be worth about $88 million.

Coles is also expected to make a decision on its property assets following the same move by Woolworths last month when its SCA Property Fund floated.

Coles could sell about $600 million worth of shopping centres in one line or create a fund and retain a cornerstone stake. Charter Hall Group and myriad superannuation funds are the mooted buyers if a direct sale option is preferred.

BWP Management's general manager, Grant Gernhoefer, confirmed a raising from his group would be made only for specific asset acquisitions.

Mr Gernhoefer said with the trust's price at a premium to NTA, "it is in the right territory for a capital raising".

"But it would be driven by asset acquisition opportunities. We don't want to make any dilutive raisings, but we are always on the lookout for appropriate properties to expand the portfolio." Mr Gernhoefer said BWP had a broader mandate of assets than just Bunnings stores, such as other homemaker centres. These could include Masters stores - owned by Woolworths - that could be sold and leased back.

The move to tap the sharemarket was kicked off recently by Charter Hall Retail REIT, which raised $100 million for new acquisitions, and Goodman Group's Australian wholesale industrial trust.

The director at Evergreen Capital, Andrew Smith, said the real estate investment trust sector was in a "purple patch" for new trusts and capital raisings.

"I would say the stage is set for a busy start to 2013 with the low cost of debt, prices above NTA and new REIT managers keen to shift strategies," Mr Smith said. "It's a real purple patch for the listed sector."

The managing director of capital transactions Australia at Knight Frank, James Parry, said institutions had returned to the market in the past three months. "Key investors include Dexus, Investa, Mirvac and Colonial to name a few," Mr Parry said.

"They are looking for two different categories: trophy assets and value add assets. A number of these are typically suburban high yielding assets. Over the past two to three months, the market has been the most active since 2007. There is a lot of renewed buying interest with the spread of activity to continue into next year, due in large part to the [low] cost of debt."

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