GPT will tap investors for $255 million in an equity raising to finance a new national Metro Office Fund.
The group launched its well-telegraphed $376 million fund on Thursday and announced the capital raising, at $2 a security, to help finance the deal. Investment bank UBS handled the deal.
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It will be the first fund of any significant value listed for many years and reflects the rise in demand for the real estate investment trust sector among yield-hungry, cashed-up investors.
The float comes a week after GPT and the GPT Wholesale Office Fund (GWOF) bought the CBW office complex in Melbourne from Cbus Property for $608.1 million.
While superfunds, real estate investment trusts and overseas buyers are competing to buy the physical assets, smaller investors are turning to listed trusts to gain an exposure to the office market – which, while challenging, is earmarked for growth.
Boosting the demand is the move to convert older-style offices into inner-city apartments, which is leading to a fall in supply for office space.
The latest data from the Australian Bureau of Statistics also shows employment spiked by 121,000 last month, following a fall in July.
The number of full-time jobs increased by 14,300 and part-time jobs surged by 106,7000. The increase in part-time jobs was the largest on record.
Overall, the unemployment rate dropped 0.3 percentage points to 6.1 per cent, which augurs well for office demand.
The new fund would comprise A-grade metropolitan and business park office properties, including the Optus Centre, 15 Green Square Close, Fortitude Valley, Queensland; Vantage, 109 Burwood Road, Hawthorn, Victoria; the Quad 2 and Quad 3, Quad Business Park, Sydney Olympic Park; and 3 and 5 Murray Rose, Sydney Olympic Park.
GPT Group chief executive Michael Cameron has said that his aim is to increase earnings from funds under management, which stand at about $8 billion.
At the group's half-year result, where the Metro fund was flagged, together with a future industrial property fund, GPT increased its 2014 full-year earnings per security growth target towards the market's expectation of greater than 3 per cent.
CLSA analysts said, after the result, GPT's strong balance sheet provides flexibility to warehouse assets to be sold to funds, an advantage over some of its funds management peers.
"GPT's $724 million of development projects currently under way across retail, $243 million, office, $181 million, and logistics, $300 million, will bolster near-term growth," the analysts said.
