The Vicinity Centres Re Ltd (ASX: VCX) share price is on watch this morning after the company announced a significant funding boost to the market this morning.
What did Vicinity announce this morning?
Vicinity announced that it has priced $400 million of 6-year Australian dollar medium term notes (MTNs), comprising $225 million of fixed rate notes and $175 million of floating rate notes.
Subject to satisfaction of customary conditions precedent, settlement of the issue of the senior and unsecured Notes is expected to occur on 27 June 2019.
The fixed rate notes were priced at a coupon of 2.60% and the floating rate notes were priced at a coupon of 3M BBSW + 1.42%.
The proceeds of the issue will be used to repay existing bank facilities and for general corporate purposes.
What's been happening for Vicinity in 2019?
The Vicinity share price has climbed marginally higher to $2.58 per share so far this year but still trails several of its Australian real estate investment trust (A-REIT) peers.
Mirvac Group (ASX: MGR) shares have climbed steadily higher so far this year to put any doubts about the health of the Australian residential real estate market to bed with strong earnings and expected future inflows from its strong development pipeline.
While Aussie real estate has managed to weather the recent correction (particularly in the major cities), the retail A-REITs haven't been so lucky as trading conditions have worsened to be nearing GFC levels of trade.
Despite the building headwinds in the sector, including an increase in the number of insolvencies and turnarounds in the retail sector, the share prices of Vicinity and Westfield-dependent Scentre Group (ASX: SCG) remain at January 1 levels.
I personally think the headwinds in the A-REIT sector remain a little too strong for my liking and I'd suggest looking elsewhere for capital growth given the steady income and limited capital appreciation driven by the REITs' corporate structures.
