Centuria Industrial REIT Upsizes $325m Notes Amid Strong Demand
Centuria Industrial REIT has expanded its exchangeable notes offering to $325 million, reflecting robust investor appetite, while simultaneously repurchasing nearly all its existing notes due 2028.
- Exchangeable notes offering upsized from $300m to $325m
- New notes carry a fixed 3.5% coupon and 21.5% premium exchange price
- Repurchase of approximately $299.5m of existing 3.95% notes due 2028
- Settlement expected on 3 September 2025, subject to conditions
- Transaction managed by J.P. Morgan, Jefferies, and Morgan Stanley
Capital Raising Success
Centuria Industrial REIT (ASX – CIP), Australia's largest pure-play industrial real estate investment trust, has successfully upsized its latest capital raising through an exchangeable notes offering. Initially targeted at $300 million, the offering was increased to $325 million due to strong investor demand, signaling confidence in CIP's industrial property portfolio and management strategy.
The new notes, issued by CIP Funding Pty Ltd, carry a fixed annual coupon of 3.5% and are exchangeable into ordinary CIP units at an initial price of $4.00. This price represents a 21.5% premium to the recent reference price of $3.29 and a modest 2% premium to the net tangible asset value per unit as of 30 June 2025. Investors thus gain exposure to CIP units with an attractive yield and potential capital upside.
Strategic Repurchase of Existing Notes
In tandem with the new notes issuance, CIP is undertaking a reverse bookbuilding process to repurchase approximately $299.5 million of its existing exchangeable notes, which carry a higher coupon of 3.95% and mature in March 2028. This move effectively refinances the company's debt at a lower cost, improving its capital structure and potentially enhancing future earnings.
The repurchased notes will be cancelled, leaving less than 15% of the original principal amount outstanding. CIP also retains the option to call and redeem any remaining notes, further consolidating its debt profile. Settlement for both the new notes issuance and repurchase is expected on 3 September 2025, pending customary conditions.
Market and Management Perspectives
The transaction is being managed by prominent financial institutions including J.P. Morgan Securities, Jefferies Australia, and Morgan Stanley, underscoring the deal's significance. Centuria's active management approach and focus on high-quality industrial assets in key metropolitan locations have likely contributed to the strong investor interest.
With $20.6 billion in assets under management as of June 2025, Centuria Capital Group continues to leverage its expertise across listed and unlisted real estate funds. This capital raising and debt refinancing initiative aligns with CIP's strategy to provide stable income and capital growth opportunities to its investors.
Bottom Line?
Centuria’s upsized notes offering and strategic repurchase mark a pivotal step in optimizing its capital structure ahead of the next growth phase.
Questions in the middle?
- How will the premium exchange price impact CIP unit liquidity and valuation?
- What are the implications for CIP’s future debt maturity profile and cost of capital?
- Could this refinancing signal further capital management initiatives or asset acquisitions?