The manager of Cromwell European REIT (Cromwell EREIT) is seeking to raise gross proceeds of some €90 million ($144.5 million) through a proposed private placement of between 200 million and 209.3 million new units in the REIT.
The units will be launched at an issue price of between 43 Euro cents and 45 Euro cents per new unit.
The manager, on Feb 24, entered into a placement agreement in relation to the private placement with the underwriters, Citigroup Global Markets, DBS Bank and UBS AG.
Under the agreement, the manager and the underwriters may decide to increase the size of the private placement to raise an additional €10 million.
Each of the underwriters have also agreed to procure subscriptions in the placement, or to subscribe and pay for the new units at the issue price, should they fail to do so.
The issue price range represents a discount of between 6.6% and 10.8% to the volume weighted average price (VWAP) of 48.2 Euro cents per unit for all trades done on Feb 23, up to the time the agreement was signed on Feb 24.
The issue price and number of new units will be determined by the manager and underwriters following a book-building process.
SEE:Cromwell European REIT reports 14.6% lower 2H20 DPU of 1.744 Euro cents; FY20 DPU of 3.484 Euro cents
The issue price equates to a FY2020 yield of 7.74% to 8.10% based on the REIT’s FY2020 distribution per unit (DPU) of 3.484 Euro cents.
The manager says it intends to use €34.1 million – or 37.8% of the total gross proceeds without the placement upsize – to partially replenish working capital in connection with the acquisition of an intermodal freehold logistics park in Italy.
Another €54.2 million – or 60.2% of the proceeds – will partially fund the acquisition of certain properties located in the Czech Republic and Slovakia, which is expected to occur before March 31.
Another €1.8 million – or 2.0% of the proceeds – will pay the estimated fees and expenses to be incurred by the REIT.
The balance will be used for general corporate or working capital purposes.
Should the acquisition in the Czech Republic and Slovakia not go through, the manager will use the funds to repay its existing debts.
Units in Cromwell EREIT closed at 48 Euro cents on Feb 23 before its trading halt before market open on Feb 24.
