CapitaLand Ascott Trust’s (CLAS) HMN stapled securities closed 9 cents lower, or 8% down, at $1.03 on Aug 3, a day after its managers announced equity fundraising (EFR) to raise $300 million via a $200 million private placement and a $100 million preferential offering.
CLAS lifted a trading halt before the market opened on Aug 3. CLAS’s stapled securities touched a low of $1.02 during trading hours, compared to a previous close of $1.12.
According to a bourse filing released at 2am, the private placement was issued at $1.043 and was approximately 2.7 times covered, while the issue price per preferential offering was fixed at $1.025.
At $1.043, the private placement issue price represents a 6.8% discount to the volume weighted average price (VWAP) of $1.1195 on Aug 1.
At $1.025, the preferential offering issue price represents an 8.4% discount to the VWAP.
The total gross proceeds of the EFR is approximately $303.1 million, comprising $200.0 million from the private placement and approximately $103.1 million from the preferential offering.
The managers intend to use 56.1% of the EFR gross proceeds, or $170.2 million, to partially fund the proposed acquisitions of three lodging assets: The Cavendish London, a 230-unit hotel in London; Temple Bar Hotel, a 136-unit hotel in Dublin; and Ascott Kuningan Jakarta, a 185-unit serviced residence in Jakarta.
According to CLAS’s managers, the total acquisition amount is $530.8 million.
The managers also intend to use 27.3% of the EFR gross proceeds, or $82.8 million, to finance CLAS’s estimated costs for the asset enhancement initiative (AEI) for the Novotel Sydney Central in Australia; while $19.9 million, or 6.6% of the EFR gross proceeds, will go towards the AEI of Citadines Holborn-Covent Garden in the UK.
See also: CapitaLand Ascott Trust to raise $300 mil, proposes to acquire three lodging assets for $530.8 mil
Eight floors and 72 rooms will be added to the Novotel Sydney Central, with an estimated yield on AEI cost of 11.3%. The yield on AEI cost for Citadines Holborn-Covent Garden is estimated at 10.6%.
Finally, some $24.4 million and $5.8 million, equivalent to 8.1% and 1.9% of the EFR gross proceeds, will go towards repaying debt and fees respectively.
CLAS managed a slow recovery after its last EFR. Following its $170 million private placement in August 2022, CLAS’s stapled security price fell from $1.17 to 88 cents, for a loss of more than 24% in the weeks following the announcement of the private placement and the subsequent issuance of 151.8 million new stapled securities.
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