SCA Property to raise $300m for buying assets on the cheap
7 April 2020, Written by Matt Ogg
While several ASX-listed companies are raising money to stay afloat or build resilience against uncertainty, Shopping Centres Australasia Property Group (ASX: SCP) is issuing new equity so it can snap up supermarket-anchored small shopping centres.
Last month SCP CEO Anthony Anthony Mellowes told Business News Australia the company's 85 neighbourhood shopping centres were thriving due to strong activity at Woolworths, Coles and Kmart, whose increased traffic in many cases helped lift sales for other retailers as well.
In an update today the company indicates this is still the case, with the expectation numerous Government stimulus packages should benefit its small business tenants and their customers.
SCP has formed the position the Covid-19 pandemic may provide a "unique opportunity to secure quality assets at competitive prices over the next 6-12 months", and in order to capitalise on that it will raise $300 million.
The raising will include a $250 million fully-underwritten institutional placement, as well as a $50 million non-underwritten unit purchase plan (UPP).
"With over $550 million in cash and undrawn facilities following the Equity Raising, we will be in a position to act quickly as earnings accretive opportunities arise," the company said.
The company's cash and undrawn debt facilities stand at $277 million prior to the raise, and it has also lifted its bilateral debt facilities by $100 million.
"We have a proven track record of securing and successfully integrating acquisitions in this market segment, where ownership remains fragmented," the group said.
"All but one of our 85 shopping centres are anchored by either a Coles or Woolworths supermarket, and as such our centres are benefitting from the elevated foot-traffic being generated by these anchor tenants over recent weeks.
"Our specialty tenants account for the other 52% of our gross rental income and are heavily weighted toward non-discretionary categories.
"Many of these specialty tenants are trading strongly, including pharmacies, medical centres, discounters, liquor and fresh food retailers."
Some of SCP's tenants have had to close down such as gyms, cinemas, massage, beauty, tanning salons and nail bars, but these represent approximately $1 million per month of the group's gross rental income.
In addition, cafés and restaurants - which are still able to offer takeaway services - represent approximately $700,000 million per month of our gross rental income
The company earns about $300 million in gross property income annually.
Data centre operator NEXTDC (ASX: NXT) is also raising capital, but similarly to SCP this is due to heightened demand.
Updated at 11:13am AEDT on 7 April 2020.
Author: Matt Ogg