GPT Sells A$1 Billion in Shares to Institutions to Repay Debt

By Jacob Greber

Oct. 25 (Bloomberg) -- GPT Group, an Australian real estate investment trust, sold A$1 billion ($620 million) in a rights offer to institutional investors at a 48 percent discount to its last traded share price to repay debt amid falling property values.

Investors bought shares at 60 Australian cents each, GPT said in a statement last yesterday in Sydney. The stock was placed in a trading halt Oct. 22 at A$1.15, valuing the company at A$2.6 billion. In a separate deal, Government of Singapore Investment Corp. bought A$250 million exchangeable securities at A$1.25 a share. GPT will seek an additional A$300 million from retail investors in an offer which opens Oct. 30.

GPT, whose Chief Executive Officer Nic Lyons stepped down this week, is seeking at least A$1.3 billion to repay borrowings after property values dropped. The company is trying to sell almost one-third of its A$14 billion of assets, and in August reported a first-half loss due to property and goodwill writedowns.

The company's shares have dropped 72 percent this year, wiping A$6.1 billion from the trust's market value. Trading in the stock is expected to resume on the Australian stock exchange Oct. 27, the company said in the statement.

The sale to GIC is expected to give Singapore's sovereign wealth fund between 12 percent and 18 percent of GPT, making it the largest shareholder, according to data compiled by Bloomberg. The GIC purchase includes a seat on the company's board and a veto over major transactions.

GIC said in a statement Oct. 23 that it has ``always believed in the fundamentals of the Australian economy and its property sector.''

GPT wrote down assets by A$344 million as it reported a first-half net loss of A$68 million compared with a profit of A$737 million a year earlier.

The new GPT securities are due to be listed on Nov. 11 and commence trading on the same day, it said. The offer is being underwritten by UBS AG, Deutsche Bank AG and Goldman Sachs JBWere Ltd.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net