Australian Unity Office Fund (ASX: AOF) share price rises after $ 31.5 million real estate deal

The Australian Unity Office Fund (ASX: AOF) The stock price is trading higher in afternoon trading.

Late yesterday the real estate investment trust (REIT) announced the sale for $ 31.5 million of one of its properties in Brisbane. The fund also announced that it will suspend its Dividend Reinvestment Plan (DRP) for this quarter.

Shares of Australian Unity are trading at $ 2.27, up 2.25%. For comparison, the S & P / ASX All Ordinary Index(ASX: XJO) is up 0.8%.

What has Australian Unity announced?

Australian Unity has announced that it has entered into an agreement to sell 241 Adelaide Street in Brisbane. The sale price of $ 31.5 million is the carrying value of the asset as at December 31, 2020.

Australian Unity sells the building with the lease to the Brisbane Club. There are 42 years left on the lease.

Speaking on the deal, fund manager James Freeman said:

[241 Adelaide Street] has been identified as non-essential for AOF and we are pleased to have entered into a conditional contract to dispose of this asset. The buyer has also entered into agreements with the Brisbane Club to acquire full ownership. The sale of AOF is conditional on the completion of the acquisition of full ownership. We are aiming for a settlement before June 30, 2021.

In addition to the asset sale, Australian Unity also announced the suspension of its DRP for the third quarter of fiscal 21.

According to Commonwealth of Australia Bank (ASX: CBA), a DRP is an alternative method for the payment of dividends. Instead of the company refunding its profits to you in cash, it will automatically invest the payment in new stock for the owner. These shares are sometimes issued at a discount. There are no fees associated with the issuance of new shares.

Finally, Australian Unity has confirmed that it will meet its FFO forecast for FY21 of 18.3 to 18.7 cents per share.

Australian Unity Stock Price Snapshot

The fund’s shares collapsed during the height of the COVID-19 pandemic, hitting a low of $ 1.50. Although they have since recovered, the share price is still down 16.23% from the same period last year.

Australian Unity has a market cap of $ 361.6 million.

Jose C. Birney