Investa Australian Property Fund IPO

[Bushman]

** Note to mods - not sure if we should just have an IPO thread that we update for these type of threads? There is already the Myer and Kathmandu IPO threads? ***


Anyway this will be the first of the next wave of A-REIT IPOs.

Key features are:
- Initially seeded by seven A-grade commercial office tenants with a Sydney and Melbourne focus.
- Properties will be sourced from Investa stable of unlisted funds.
- Properties will have large weighting 'blue chip' tenants Telstra, Commopnwealth of Australia and Westpac (88% of income).
- Initial IPO gearing will be 0%; fund can be geared up to 20-30% and will have first rights on certain building's in the Investa development pipeline (including The Ark in North Sydeny).
- yield will be 7% cash and 35% tax deferred.
- Book build starts next week.
- Raising is via Macquarie and Morgan Stanley.
- Looks like an external management model under an Investa fee model.

Investors will come in at $3 per share top raise $950m. Portfolio valuation at the moment is $929m at current valuations and this shows a 7.7% initial portfolio yield. EV is $1b with the balance being capital needed for capex and lease incentives.

The source of all this is today's AFR plus some intuition but it is also obviously doing the institutional rounds at the moment. This will be on the back of strong insto demand for a pure Aussie play which is not surprising.

As I said, this will be the first of a few in 2010 IMO as the various sectors recapitalise.

For those not in the know to the background of this, Investa was purchased by some Morgan Stanley real estate trusts a few years back. This is a part of the recapitalisation and sell down of that deal I would say.

Cheers B'man

[skc]

Investors will come in at $3 per share top raise $950m. Portfolio valuation at the moment is $929m at current valuations and this shows a 7.7% initial portfolio yield. EV is $1b with the balance being capital needed for capex and lease incentives.

The price to NTA ratio of the REIT sector are all below 1 at the moment.

GPT 0.86
DXS 0.78
CFX 0.96
CPA 0.81
GMG 0.73
IIF 0.53

Is there anything special about Investa that allows them to price well above market? If one if bullish on the recovery of the sector, then a beaten-down-but-not-dead REIT may offer better return than a spanking new one that's fully priced?

[Bushman]

The price to NTA ratio of the REIT sector are all below 1 at the moment.

GPT 0.86
DXS 0.78
CFX 0.96
CPA 0.81
GMG 0.73
IIF 0.53

Is there anything special about Investa that allows them to price well above market? If one if bullish on the recovery of the sector, then a beaten-down-but-not-dead REIT may offer better return than a spanking new one that's fully priced?

No debt, no legacy issues, exposure to Melbourne/Sydney CBD office, tenants are all government/ASX-20. So you could argue the outlook will be more stable than some of the others listed.

[Bushman]

Float has been canned due to a stand off by instutitions and Investa re the premium of the IPO price of $3 to the stated NTA.

Ticks to yield, structure, assets, fees etc.

Close but no cigar.

[skc]

Float has been canned due to a stand off by instutitions and Investa re the premium of the IPO price of $3 to the stated NTA.

Ticks to yield, structure, assets, fees etc.

Close but no cigar.

LOL... Myer could fool some Mum and Dads with Hawko and mass media campaign. Investa has nothing!

Ultimately it came down to price... and it was too expensive compared to what you can get on the market.