Investec Australia Property Fund raises R854m

It will be some time before capital raises return en masse to SA’s listed property sector with only a few funds attracting investors’ appetite, Craig Smith, head of research at Anchor Stockbrokers, has said.

He spoke after Investec Australia Property Fund (IAPF) successfully raised about R854m in new shares on Thursday.

Smith said it is unlikely there will be many similar bookbuilds across the sector during the rest of 2019. The only Australia-focused property stock trading on the JSE closed a fully underwritten accelerated bookbuild where 55,572,553 new shares were placed at an issue price of A$1.52 a share.

The proceeds will be used to buy three industrial properties in Perth, Adelaide and Darwin. The fund is trying to be more aggressive, having listed on the Australian Securities Exchange (ASX) in May. It listed on the JSE in 2013. It already owns 28 properties in Australia and New Zealand with a portfolio worth more than A$1.06bn (R10.8bn).

Smith said only a handful of firms are trading at a premium or in line with their net asset values. “It’s hard to see many capital raises occurring in this environment. It’s only possible for certain counters where there is currently investor appetite.”

IAPF has been raising capital since it moved to the ASX’s main board in May and delisted from the Bermuda Stock Exchange (BSX). In May, it raised A$102m by selling 76.9-million new units on the ASX at A$1.32 a piece.

Keillen Ndlovu, head of listed property funds at Stanlib, said 2019 has been a quiet year so far for equity raises. “We have only seen companies that are expanding offshore coming to the market to raise equity. This includes Equites, which owns industrial assets in the UK; StorAge Reit, which owns personal storage assets, also in the UK; and Vukile Property Fund, which has been investing in Spain. Now we are seeing appetite for Australian property.”

In its most recent results, IAPF reported that its distribution to unit holders for the year to end-March had grown 2% to 10.23c before withholding taxes, or 1.2% to 9.40c after subtracting withholding taxes.

Investec Property Fund owns a 9.9% stake in IAPF.