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Vicinity Launches $1.4bn Raising, Drops Distribution

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Vicinity Centres have dropped distribution and launched $1.4 billion in capital raising as Covid-19 impacts asset values and rental income.

The ASX-listed regional mall landlord announced it would undertake $1.2 million in institutional placements along with raising $200 million through a non-underwritten security purchase plan.

This came as draft valuations showed there was an expected reduction in aggregate asset value by anywhere between $1.8 billion to $2.1 billion.

The group were undoubtedly affected by Covid-19 as less than half of tenants had paid their rent for the three month period from March to May.

Vicinity was in negotiations in relation to short-term variations to their leases as in that time foot-traffic dropped to a low in April of 50 per cent and only 42 per cent of stores were trading at that time.

This follows similar announcements from Scentre, who said it would not pay an interim distribution for the half year period, ending 30 June following a slow start to the year.

Related: Scentre, Vicinity Focus on Recovery, March Results

▲ Vicinity Centres still have a number of development projects in the pipeline including one at Box Hill Central.
▲ Vicinity Centres still have a number of development projects in the pipeline including one at Box Hill Central.

Vicinity Centres managing director Grant Kelley said the capital raising would provide capacity to invest in their assets to ensure they continue to deliver on consumer, retailer and community expectations.

“We are taking decisive action today to strengthen our balance sheet and provide Vicinity with flexibility to respond to the uncertainty caused by Covid-19 and the evolving retail landscape,” Kelley said.

“This equity raising also provides support for the continuation of Vicinity’s investment-grade credit ratings.”

The Gandel Group has committed to subscribe for an additional $100 million of new securities in the placement underwritten by Credit Suisse Limited and Macquarie Capital Limited.

Securities issued under the placement and offered through the security purchase plan will be issued at a fixed price of $1.48, 8.1 per cent lower than the closing price of $1.61 on 29 May.

Vicinity shares dropped from $2.49 at the start of the year to a low of 97 cents on 27 March and were slowly recovering.

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Article originally posted at: https://theurbandeveloper.com/articles/vicinity-centres-drops-distribution-as-covid-19-hits-assets-rent