Yesterday its share price drop sharply -5.04% to $2.45 per share. Only news were that they priced $400 million of medium-term notes.
Explanation Vicinity Centres (VCX, formerly Federation Centres) is a vertically integrated Australian Real Estate Trust specialising in the ownership and management of 110 Australian shopping centres. It provides a full suite of property services including property investment, retail development, property management, leasing and fund administration. You will recognise their assets when you see DFO signs.
Vicinity announced that it has priced $400 million of 6-year Australian dollar medium term notes (MTNs), comprising $225 million of fixed rate notes and $175 million of floating rate notes.Subject to satisfaction of customary conditions precedent, settlement of the issue of the senior and unsecured Notes is expected to occur on 27 June 2019.The fixed rate notes were priced at a coupon of 2.60% and the floating rate notes were priced at a coupon of 3M BBSW + 1.42%.The proceeds of the issue will be used to repay existing bank facilities and for general corporate purposes.
Conclusion The drop was due to an end-of-year sale by fund managers re-balancing portfolios. The news of cheap funding are actually positive news.
Fair value of VCX is $2.93-$2.96. That's 20% higher than today's price. Current dividend is 6.5%
VCX Price at posting:
$2.47 Sentiment: Buy Disclosure: Held
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