(BusinessDesk) - Argosy Property, whose shareholders agreed to corporatise the company last year after buying out the ANZ Bank-owned manager, wants to raise up to $100 million to pay for two buildings housing long-term government tenants in Wellington.
The new equity will come in two tranches, with $80 million raised from institutional and qualified investors and $20 million through a share purchase plan for existing shareholders, the Auckland-based property investor said in a statement. Shares in the placement to institutional investors will be priced at 88 cents apiece, a 6.3 percent discount to the current trading price of 94.5 cents.
The cash raised will go towards two buildings it has conditionally bought in Wellington - the former Ministry of Defence building on Stout St and NZ Post House on Waterloo Quay. The Stout St building will cost Argosy $33.2 million to acquire and a further $46.6 million to upgrade, while NZ Post House's purchase price was $60 million with another $40 million flagged for upgrades.
"The capital raise together with existing debt facilities and our programme of non-core property sales will support the upgrade of these properties and potential further near-term accretive acquisitions," chairman Mike Smith says. "The acquisitions will enhance Argosy's portfolio and add significant value over time."
The new buildings will broaden Argosy's regional portfolio, and is expected to extend the landlord's weighted average lease term to 6.1 years from 5.4 years.
The Wellington buildings are forecast to add about $15 million in annual rentals, taking the top two spots in Argosy's rent-roll.
The institutional placement is being managed by First NZ Capital, and both raisings are expected to be completed by February, with the last of the acquisitions settled in March.