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  • Irongate Group (IAP) announces a $50 million capital raise to partly fund the acquisition of a Canberra office building
  • The property at 38 Sydney Avenue, Canberra will be purchased for $73.75 million from Blackstone
  • The property is an A-grade office building comprising of 8901 square metres of accommodation and is 55 per cent leased
  • The fully underwritten placement of over 34 million new paid ordinary stapled securities at $1.47 per share represents a 3.9 per cent discount
  • IAP shares are sitting at $1.53 in the middle of a trading halt

Irongate Group (IAP) has announced a $50 million capital raise to partly fund the acquisition of a Canberra office building.

The property at 38 Sydney Avenue, Canberra is to be purchased for $73.75 million from Blackstone and is to be partly funded through a fully underwritten institutional placement at an issue price of $1.47 per staples security.

Irongate said the property is being secured on an initial yield of 5.13 per cent.

“This transaction builds on IAP’s track record of acquiring strategically located, good quality income-producing properties.” IAP CEO Graeme Katz said.

“The property has had approximately A$12.6 million spent on fit out and refurbishment works in the last two years including a full atrium lobby upgrade, the addition of end-of-trip facilities and refurbishment of on floor amenities.”

Mr Katz said the Canberra officer market has proved resilient through the pandemic, underpinned by the Government sector.

The property is an A-grade office building comprising of 8901 square metres (sqm) of accommodation plus four levels and is 55 per cent leased to the Australian National Audit Office with 13.5 years remaining on the lease and fixed rent reviews of 3.5 per cent.

The remaining office space (3920 sqm) is subject to a vendor-provided 24-month non-refundable gross rent guarantee, resulting in an 8.5-year weighted average lease expiry for the property after completion.

“The property is located 500 metres from Parliament House in a precinct with A-grade vacancy of less than 1 per cent, and this, together with the property’s NABERS energy rating of 4.5 stars and large floor plates that are easily subdividable, gives us confidence with respect to future leasing activities,” Mr Katz said.

The fully underwritten placement of over 34 million new paid ordinary stapled securities at $1.47 per share represents a 3.9 per cent discount from the last closing price and a 6.2 per cent distribution yield, according to the company.

New shares under the placement will rank equally with existing IAP shares.

The placement is fully underwritten by Macquarie Limited and UBS AG, Australia Branch with remaining funds to be funded under a new tranche of the debt funding facility provided by Westpac, ANZ and PGIM.

“The placement, the proceeds from which will be used to partly fund the acquisition, provides IAP with the opportunity to increase liquidity while preserving balance sheet capacity for future growth.” Mr Katz said.

Irongate said their FY22 DPS guidance remains unchanged at 2 to 3 per cent.

IAP shares are sitting at $1.53 in the middle of a trading halt.

IAP by the numbers
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