Italy's IGD carries out €200m capital hike to finance acquisitions

Italian REIT IGD has placed around €200 mln worth of shares in a highly dilutive rights issue aimed at financing the acquisition of a number of assets in Central and Northern Italy.

The company, which is based in Bologna and focuses on retail assets, said on Monday that it has placed 396 million shares at €0.50 each, bringing its total market capitalisation to €550 mln, or 760 million shares.

The operation was carried out to finance the acquisition of the Città delle Stesse mall and adjoining hypermarket in Ascoli Piceno, the Lungosavio hypermarket in Cesena, the Civita Castellana and Cecina supermarkets and the Schio hypermarket, for a total of €93 mln.

The hypermarkets and supermarkets have been simultaneously leased back for a term of 18 years to vendors Coop Adriatica and Unicoop Tirreno, IGD's majority shareholders with a 57% stake.

Analysts at Societe Generale, which have updated the IGD stock one notch from Neutral to Buy, were critical of the operation, which was executed at a very low price and was highly dilutive for existing shareholders.

'It is hard to understand the genuine need for this transaction considering current market conditions and the fact that the issue price stood at a 76% discount to the latest NAV, while the acquisition was carried out without any discount on the price market,' commented analyst Henri Quadrelli in a note.

For IGD, the operation will result in a 5% increase in its portfolio value and a 15% decrease in LTV, bringing leverage below 50%.

Earlier this month, Italy's other REIT Beni Stabili also carried out a capital increase, placing shares at a discount to NAV of 52%.