Vicinity, a prominent property giant from Australia, has recently announced that it will raise a capital of $1.4 billion to strengthen its balance sheet.
The firm is known to be among the biggest retail property groups in the country with retail assets under management (AUM) worth $26 billion in 64 shopping centers. It is also a part-owner of the key Chadstone Shopping Centre.
Vicinity has confirmed that it will be doing a completely underwritten institutional placement worth $1.2 billion. It will further make an underwritten security purchase plan (SPP) in order to raise more $200 million.
The company has reportedly withdrawn the earning guidance as part of the update and shall not pay a distribution for nearly six months. The valuations for the preliminary draft of 29 May suggest that there is a reduction of the value of a total assets between 11% to 13%.
The institutional part shows about 22% of shares on issue under capital raising. The price of the issue is about $1.48 which is a discount of 8.1% to the closing price of nearly $1.61. The regular shareholders shall be allowed to buy new shares up to $30,000 starting from June 9, 2020. The offer will be closed down by July 6.
CVID-19 has been responsible for the reduction of foot traffic that has led the tenants to shut their stores down and even negotiate on the rent. The time to stabilize the rental income has remained uncertain.
The foot traffic is currently at 74% in comparison with the previous year, which was a low of 50% in the month of April. Nearly 80% of the stores are currently trading.
The company has extended a debt of about $650 million while established about $300 million of new debt deferred expenditure and even reduced pay. The capital raising will turn out to be beneficial for people to purchase cheap shares for the short term.