The Abacus Property Group Ltd (ASX: ABP) share price closed 3% lower on the ASX yesterday after the company announced a $250 million institutional placement plan to fund future growth.
What did Abacus announce to the market yesterday?
In yesterday's announcement, Abacus said it is undertaking a fully underwritten $250 million institutional placement as well as a non-underwritten $25 million share placement plan (SPP) for investors.
Abacus said it plans to use the equity raised through the placements to purchase in excess of $710 million of "value-accretive identified opportunities" in line with its strategic priorities and core focus areas of office and self-storage property.
These opportunities include:
- Australian Unity Office Fund consortium bid to acquire the remaining units of the fund for an additional $308 million
- Self storage acquisition and development pipeline with $118 million of capital committed
- Asset development within Church Street, Richmond, Victoria, which requires an estimated $68 million of committed capital from Abacus
- A Sydney CBD office asset for $220 million of committed capital
What else did Abacus say in its announcement?
The Aussie property group also provided unaudited figures ahead of its full-year 2019 (FY19) results in August.
Abacus said its preliminary unaudited underlying profit is 24.0 cents per share (cps) with funds from operations (FFO) of 22.2 cps.
The company expects to distribute 18.5 cps to its investors, which represents year-on-year (YoY) growth of 2.8% compared to FY18 numbers.
Preliminary net rental income came in at $114 million, up 8% on FY18 as the company continues to move towards its goal of becoming a high conviction asset manager and investor.
How did the Abacus share price react?
Clearly, investors weren't impressed with either the equity raising or Abacus' preliminary results, with the Abacus share price closing 3% lower yesterday at $4.14 per share, although it has since bounced back slightly in morning trade and is currently sitting at $4.16 per share at time of writing.
The Abacus share price has climbed 29.14% higher so far this year as the company's core focus on office and self storage commercial properties has paid off.
Abacus appears to have managed to avoid much of the downturn in the Aussie retail and residential sectors and maintained a strong core earnings profile in the meantime.
