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Centuria (ASX:CIP) - Executive Director, Jason Huljich - The Market Herald
Executive Director, Jason Huljich
Source: The Australian
  • Centuria Industrial REIT (CIP) is set to raise $340.8 million to purchase the Telstra Data Centre in Clayton, Victoria, worth $416.7 million
  • The company will also purchase an industrial facility and a distribution centre, making this purchase the largest portfolio acquisition the company has made
  • To purchase these assets, Centuria will raise nearly $341 million through an entitlement offer, offering shares for $3.15 each
  • The Telstra sale will include a 30-year leaseback arrangement, meaning Telstra will be able to stay in the centre
  • The transaction is expected to be completed by the end of the month
  • Centuria last traded on the market for $3.31 per share on August 4, while Telstra is down 1.72 per cent and is trading for $3.42 each

Centuria Industrial REIT (CIP) is set to raise $340.8 million to purchase the Telstra Data Centre in Clayton, Victoria, worth $416.7 million.

This morning, the company entered a trading halt ahead of the deal. This means Centuria shares will be paused until Friday, August 7, or when it releases the outcome of the capital raise.

Centuria will pay $416.7 million for the Telstra centre. Additionally, the company will also purchase an industrial facility in Smeaton Grange, NSW and a distribution centre in Tullamarine, VIC.

These purchases will equal $447.1 million, making it the largest portfolio acquisition the company has made.

To purchase these assets, Centuria will raise $340.8 million through an entitlement offer, offering shares for $3.15 each.

The Telstra sale will include a 30-year leaseback arrangement, which means Telstra will retain ownership of all IT and telecommunications equipment and is responsible for the building, future capex requirements and security.

The data centre is 25 kilometres from Melbourne's CBD and incorporates 10 buildings, which includes Telstra's new 6.1 megawatt (MW) data centre.

“As part of T22, we have the ambition to monetise up to $2 billion worth of assets to strengthen our balance sheet. This deal means we have now reached over $1.5 billion," Telstra CEO Andrew Penn said.

The transaction is expected to be completed by the end of the month.

Financial Year 2020

For the 2020 financial year (FY20), Centuria reported a statutory profit of $75.3 million, which is lower than last financial year's $88.8 million. However, its funds for operations was up from FY19's $50 million and came in at $63.5 million.

"Throughout FY20, industrial assets have continued to demonstrate their resilience particularly against the backdrop of COVID-19," Fund Manager Jesse Curtis said.

"The rising trend of e-commerce, particularly for nondiscretionary items, such as groceries and pharmaceuticals, is driving leasing demand along with manufacturing and packaging. CIP benefits from 52 per cent of its tenancy base belonging to production, packaging and distribution of consumer staples and pharmaceutical sectors," he added.

FY20 has been the year of growth for the company, as its assets under management increased 30 per cent to $1.6 billion. Due to the growth, the company was listed in the ASX 200 list.

Centuria last traded on the market for $3.31 per share on August 4, while Telstra is down 1.72 per cent and is trading for $3.42 each at 11:08 am AEST.


Find out more about this capital raise


CIP by the numbers
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