According to Morningstar, NTA falls after the acquisition to $1.09 (So today CPA is trading @ 29.7% discount to its NTA!!!!).
The acquisition should be EPU/DPU neutral in FY11 and accretive from FY12.
After the Axquisition, Melbourne weighting increases from 15% to 29%. This is positive as Melbourne has good fundamentals with low vacancies and increasing demand pushing tenant incentives lower and effective rents higher. It should be one of the nation?s strongest major market over the next few years.
The assets are relatively young so near-term capex requirements should be minimal. Balance sheet remains strong with gearing increasing 260bps to 27.1%, below the 30-40% target range. A- credit rating was reaffirmed.
Finally, let us remember that CPA raised $240m through the institutional offer, and that the institutional offer closed OVERSUBSCRIBED @86c per unit.
Personally, i consider myself so lucky to be able to accumulate at a price that is below the discounted equity raising price. And I am not going to let the share price movement in the short term affect my convictions!
CPA Price at posting:
84.0¢ Sentiment: Buy Disclosure: Held
