ING Office Fund aims to raise $415m

To meet all repayments until June 2012

Victoria Tait

Thu 18 Jun 2009

ING Office Fund (IOF) has unveiled plans to sell up to $415 million worth of new shares, which if successful would bring its total capital raised in six months to just over $800 million.

IOF said the capital raising allows it meet all debt repayments until June 2012. It also gives the company more breathing space in terms of the price and timing of asset sales. 

"This is good in that it reduces some of the risk and uncertainty surrounding the company," Morningstar research analyst Adrian Atkins said.

The $300 million institutional component of the equity capital raising is underwritten, the real estate investment trust said.

The institutional portion is made up of a sale of $90 million worth of new shares at 45 cents each and an accelerated non-renounceable 2-for-5 entitlement offer, also at 45 cents a share, totalling $210 million.

IOF said it would extend the entitlement offer to retail investors and may raise up to $115 million through that segment of the raising.

Cash-strapped IOF raised $400 million in December at 80 cents a share.

Money raised will be used to pay down debt, creating a bit of daylight between IOF's debt levels and its banking covenants.

"This offer strengthens our balance sheet, substantially improves covenant headroom and enhances our liquidity," chief executive Tino Tanfara said.

Covenant gearing will fall to between 31.2 and 34.7 per cent depending on retail uptake, below the 50 per cent limit.

Recent equity raisings by Australian real estate companies Stockland and GPT have fallen short of their targets.